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Tipsheet

Final Inflation Report Before Midterms Released. The Numbers Are Very Bad.

Paul Sakuma

In the final Consumer Price Index report to be released before November's midterm elections, consumer inflation blew past Wall Street estimates in September to the highest core CPI read since 1982, proving again that the Biden administration's months of claims — first that inflation wasn't a problem, then that it was "transitory," then that it was being fixed by the president — was just political spin. 

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Headline CPI advanced 0.4 percent in September, double the 0.2 percent estimated, for a 12-month increase of 8.2 percent, also hotter than predicted. That headline number had advanced 0.1 percent in August, showing that price increases are accelerating again (4x in one month) despite Biden's frequent parties at the White House to celebrate the passage of the inflation reduction act and other Democrat policies to supposedly bring relief to Americans.

The core CPI number — excluding food and energy and therefore generally less volatile — increased 0.6 percent in September for an annual advance of 6.6 percent.

The Bureau of Labor Statistics outlined where the increases hit Americans the hardest:

Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. These increases were partly offset by a 4.9-percent decline in the gasoline index. The food index continued to rise, increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The energy index fell 2.1 percent over the month as the gasoline index declined, but the natural gas and electricity indexes increased.

The index for all items less food and energy rose 0.6 percent in September, as it did in August. The indexes for shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and operations, and education were among those that increased over the month. There were some indexes that declined in September, including those for used cars and trucks, apparel, and communication. 

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That is, the only reason consumer inflation was held to a 4x acceleration from August's report and to only a 1982 high, is because gas prices had dipped from their all-time highs reached earlier in the year. But those prices are ticking up again, meaning the lone decreasing index might soon again add to the overall increases.

Still, on an annual basis, gasoline is up 18.2 percent in the 12 months ending in September. As temperatures in northern states grow colder, utility gas is up 2.9 percent in September and 33.1 percent in the last year while fuel oil is up 58.1 percent in the last 12 months. 

Overall, Americans' real wages continue to lag behind continuing, accelerating, runaway inflation. Comparing September's monthly price increase of 0.4 percent and an annual headline inflation reading of 8.2 percent to the September jobs report released last week, American workers are making real wages that dropped 0.1 percent in September and 3.2 percent over the last 12 months. Is that "build back better" at work for Americans in the greatest economic recovery in U.S. history, as Biden claims?

The stock market isn't buying Biden's promises of a robust economy, with the Dow Jones, Nasdaq, and S&P 500 all nosediving on the latest inflation read. 

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The market reaction is due to growing fears that the Federal Reserve will continue its already aggressive — though apparently not hawkish enough — interest rate hikes in a bid to get inflation down to a goal of two percent set by Fed chairman Jerome Powell at the central bankers' next meeting in early November. 

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