Americans hit by worst inflation; further increases anticipated
WASHINGTON: The US consumer prices increased solidly in September as Americans paid more for food, rent and a range of other goods, putting pressure on the Biden administration to urgently resolve strained supply chains, which are hampering economic growth.
With prices likely to rise further in the months ahead following a recent surge in the costs of energy products, the report from the Labor Department on Wednesday could test Federal Reserve Chair Jerome Powell’s repeated assertion that high inflation is transitory. Powell and the White House have blamed supply chain bottlenecks for the high inflation.
Reuters reported that the supy chains have been gummed up by robust demand as economies emerge from the COVID-19 pandemic, thanks to more than $10 trillion in global economic stimulus, about half of it in the United States. The coronavirus has caused a global shortage of workers needed to produce raw materials and move goods from factories to consumers.
U.S. President Joe Biden is scheduled to speak later on Wednesday on supply-chain issues following meetings with retailers, unions and other stakeholders. In June, the White House formed a task force and named a “bottleneck” czar to push private-sector companies to ease the supply-chain snarls.
“Inflation is no longer ‘transitory,'” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Los Angeles. “Supply-chain bottlenecks are getting worse. The logjam is unlikely to ease anytime soon despite the latest intervention by the White House.”
The consumer price index rose 0.4% last month after climbing 0.3% in August. Food prices jumped 0.9% after increasing 0.4% in the prior month. The largest rise in food prices since April 2020 was driven by a jump in the cost of meat.
Owners’ equivalent rent of primary residence, which is what a homeowner would receive from renting a home, increased 0.4%. That was the biggest gain in five years and followed a 0.3% rise in August. Rent of primary residence shot up 0.5%, the largest advance since May 2001.
Rents are rising as demand for housing in cities rebounds after a pandemic-induced exodus to suburbs and other low-density locations. Economists expect rents, which account for nearly a third of the CPI, will be a major source of inflation in the months ahead. TF Report