Inflation is up and everything costs more. KevinTDugan gives three reasons why
Maybe just half a tank today. Photo: Xinhua News Agency/Xinhua News Agency via Getty Ima Feeling a little more broke than usual? The federal government released today its assessment of the inflation rate, officially the Consumer Price Index, and the numbers are higher than experts had predicted — and higher than at any point since 1982. Gas is up 58 percent over the last year. Beef is 21 percent pricier, too.
Inflation — at least at the current levels — has long been regarded as the archenemy of a healthy economy. It sunk Jimmy Carter’s presidency and created a decade of economic turmoil in the late ’70s and early ’80s. Things haven’t gotten that bad yet, but there’s a concern that this could get out of hand.
This summer and fall, the backlog of containers at major ports was so severe that one ship waited nearly eight weeks before it could dock and unload its cargo, according to the Wall Street Journal. Facing bare shelves and delays, stores started to raise prices on the goods they did have. The Biden administration proposed billions in funds to keep the flow of goods going, and while the delays have eased up since then, that has more to do with conditions getting better in Asia.
The November data, too, appears to reflect the peak of prices. Last month, a barrel of oil hit a high of $85, more than double where it was a year ago. Since then, it’s fallen to a little above $70, due to the brief panic over omicron and an increase in production from oil-producing countries. When prices are this high, shale producers in the U.S. also tend to start taking oil out of the ground, since the high prices justify the expensive work. “Prices are still highish. They’re in the low 70s.
On the other side of the supply-and-demand equation, corporate America has also had a role in rising prices. Public companies had one of their best earnings seasons ever last quarter, boosted not only by the stimulus money that’s leaving customers’ accounts, but by the subsidies that came directly from the government for the businesses. That gave them the leeway to raise prices — even on products that weren’t facing supply-chain problems.
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