Great Lakes Wire

The most recent-data report on inflation was released on Oct. 13. The numbers were greater than what was expected. Core inflation was recorded as the highest in 40 years. Some economists see the economy heading towards a recession and claim inflation stems from government spending. Core inflation was recorded as the highest in 40 years.

According to Trading Economics, the annual core inflation rate, which “tracks changes in prices that consumers pay for a basket of goods which excludes volatile food and fuel costs”, was 6.6% in September, higher than what was expected and the highest in 40 years. Trading Economics reports shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and operations, and education were among the indexes that saw a price increase. Used cars and trucks, apparel, and communication declined in September. The “all items less food and energy” data from the Bureau of Labor Statistics is the same as the core inflation indicator from Trading Economics.

As the US Bureau of Labor Statistics released the numbers on inflation for the Midwest Region, including Michigan, today, data shows inflation at 8.1%, meaning the consumer price index (CPI) has increased 8.1% in September of this year compared to 2021.

Prices increased by 0.2% in September compared to August in the Midwest Region. Food prices also increased by 12.7% and energy prices rose 20.7% since last year.

This comes as the U.S. Bureau of Labor Statistics likewise issued its latest CPI summary for the nation, which found that the rate of inflation over the last 12 months stands at 8.2%. It rose 0.4% in September. In the last year, food costs have risen by 11.2%, energy costs have increased by 19.8%, gas prices have risen by 18.2%, and the cost to purchase a new vehicle has increased by 9.4%.

Inflation numbers rose higher than what was expected, FOX Business reports. Both the 0.4% index increase from last month and an annual 8.2% overall increase from last year, were higher than the expected 0.2% monthly increase and 8.1% annual increase that Refinitiv economists predicted. 

This is a “worrisome sign” for the Federal Reserve which will continue to increase interest rates in an attempt to relieve the high inflationary pressures. According to FOX Business, “core prices” rose 0.6% in September and 6.6% since last year, demonstrating the highest inflation rate since 1982. Fox Business also reports stocks have fallen with the Dow Jones Industrial Average down more than 500 points. 

According to FOX Business, low-income Americans are struggling the most as it is more difficult to pay for basic necessities like food and electricity. The only commodity to decrease in price was gas prices, which fell 4.9% in September. 

"The composition of the inflation reading is perhaps even more worrisome than the overall number. Increases in the shelter and medical care indices, the stickiest segments of the CPI basket, confirm that price pressures are extremely stubborn and will not go down without a Fed fight,” Seema Shah, the chief global strategist at Principal Asset Management, said, according to Fox Business.

Grocery costs climbed 0.7% in September, seeing an increase of 13.0% since September of 2021. Rent and shelter costs are up 6.6% and 6.7%, respectively. Fox Business reports inflation to be a top priority for voters in the upcoming midterm elections. 

Some economists are predicting the economy is heading for a recession, according to the Washington Post. While previous recessions have seen the stock market plunge between 34% and 57%; so far the S&P 500 has decreased by 24% since last year, the Washington Post reported. Housing industry mortgage rates are rising, the sale of new homes is decreasing and manufacturing is growing at the slowest pace since 2020, according to the Washington Post. As the Federal Reserve continues to hike interest rates, it will slow the economy as it will become more difficult to receive loans. The Washington Post reported the stock market could fall to 34% if investors see a “hard landing” of the economy in the near future.

Reuters says President Biden and Democrats were disappointed with the inflation numbers for September, as they were looking forward to seeing them go down right before the midterm elections, in 2021, the White House called rising inflation “transitory” while some economists predicted inflation would continue to remain present. 

"Americans are squeezed by the cost of living: that’s been true for years, and they didn’t need today’s report to tell them that," Biden said in response to the CPI report for September, Reuters reports. 

 According to Reuters, the White House is emphasizing the job market and low unemployment rate as well as that over the last 3 months, inflation has averaged 2% at an annualized rate, down from 11% in the previous quarter. Biden’s announcement to use oil from the strategic petroleum reserve has curbed gas prices and the passing of the Inflation Reduction Act will help curb medical and energy prices in the long-term, but with no short-term effect to help Democrats in the election in November.

"Nearly a year after Biden promised Americans inflation had peaked, core inflation is now the highest on record in his presidency," Kevin Brady, the Republican leader of the Ways and Means Committee said in a statement to Reuters. 

Paige Terryberry, Senior Analyst for Fiscal Policy at the John Locke Foundation confirms the current bout of inflation stems from the massive injection of cash since the pandemic’s onset.