Old North News

The most recent data report on inflation has been released and the numbers were greater than expected. Some economists see the economy heading toward a recession and claim inflation stems from government spending. The report did not bode well for President Joe Biden and Democrats looking toward the election in November. The consumer price index for the south region, which includes North Carolina, was reported at 8.7%.

On Thursday, the U.S. Bureau of Labor Statistics released the numbers on inflation for the South Region, which includes North Carolina. The data shows inflation at 8.7%, meaning the consumer price index has increased 8.7% in September of this year compared to 2021. Prices increased by 0.2% in September compared to August in the South Region. Food prices also increased by 11.4% and energy prices rose 17.2% since last year.

The U.S. Bureau of Labor Statistics also issued its latest Consumer Price Index (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%.

According to Fox Business, inflation numbers rose higher than what was expected. 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% month increase and 8.1% annual increase that Refinitiv economists predicted. This is a “worrisome sign” for the Federal Reserve who will continue to increase interest rates in an attempt to relieve the high inflationary pressures. 

Fox Business reports that “core prices” rose 0.6% in September and 6.6% since last year, demonstrating the highest inflation rate since 1982. Stocks have fallen with the Dow Jones Industrial Average down more than 500 points. 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 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 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 top priority for voters in the upcoming midterm elections.

According to The Washington Post, some economists are predicting the economy is heading for a recession. 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. Housing industry mortgage rates are rising, the sale of new homes is decreasing and manufacturing is growing at the slowest pace since 2020. 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 added that the stock market could fall to 34% if investors see a “hard landing” of the economy in the near future.

Reuters said 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.

Biden responded to the CPI report for September, saying "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," according to Reuters. 

Reuters reports that the White House is emphasizing the job market and low unemployment rate as well as that over the last three 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 President 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, according 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.