The AP reports that inflation has risen 5.4 percent from a year ago — unexpectedly. (Where have we heard that before?) Here are the first four paragraphs of the AP story:
Another surge in consumer prices in September sent inflation to 5.4% from a year ago, matching the highest such rate since 2008 as tangled global supply lines continue to create havoc.
Consumer prices rose 0.4% in September from August as supply chain disruptions kept many goods scarce. The costs of new cars, food, gas, and restaurant meals all jumped.
The annual increase in the consumer price index matched readings in June and July as the highest in 13 years, the Labor Department said Wednesday. Excluding the volatile food and energy categories, core inflation rose 0.2% in September and 4% compared with a year ago. Core prices hit a three-decade high of 4.5% in June.
The unexpected burst of inflation this year reflects sharply higher prices for food and energy, but also new and used cars, hotel rooms, clothing, and furniture, among other goods and services. COVID-19 has shut down factories in Asia and slowed U.S. port operations, leaving container ships anchored at sea and consumers and businesses paying more for goods that don’t arrive for months.
I’m not big on predictions, but I predict that there will be more where this came from — unexpectedly. However, that’s not quite the way the Federal Reserve foresees it:
Chair Jerome Powell has repeatedly said that the price gains should “abate” next year, bringing inflation closer to the target [i.e., 2 percent].
Fed Vice Chair Richard Clarida echoed that view in remarks Tuesday.
“The unwelcome surge in inflation this year, once these relative price adjustments are complete and bottlenecks have unclogged, will in the end prove to be largely transitory,” he said.
Raphael Bostic, president of the Atlanta Federal Reserve, joked Tuesday in separate remarks that “transitory” is now seen as the equivalent of a curse word at the Atlanta Fed. Bostic said that the price spikes mostly reflect the pandemic’s impact on supply chains and added they should eventually fade, but it will likely take longer than many Fed officials initially expected.
Bostic has quite the sense of humor. I hope someone will tell him it’s not funny. When it comes to the use of the adjective “transitory” to describe rising inflation, perhaps they can draw on Alfred Kahn’s creative Carter-era approach to inflation and refer to it as “ripening” (as in “banana”).
One more point. With the prospect of the Democrats’ BBB spending orgy in view — in the words of the song, we’ve only just begun.