The Consumer Price Index (CPI) spiked by 8.2% from September 2021 to September 2022, as expressed via a report made public this past Thursday by the Bureau of Labor Statistics, rocketing past expectations despite harsh contractionary policy applied by the Federal Reserve and marks an ill omen for the prospects of Democrats prior to the coming November Midterms.
The month-to-month rise of over 0.4% far surpassed the forecasts from the analysts, as core inflation — which does not take into account the various more volatile categories of food and energy — rose up to 0.6% against an estimate of 0.4%. Despite the cost of energy dropping in a few categories, a 0.8% spike in food prices and a 0.7% increase in shelter prices added in to the headline number.
“Given elevated costs for food, home heating, and health care, the budgets of many may remain constrained next year,” expressed Mark Hamrick, a senior economic analyst for Bankrate, in a release.
The Dow Jones Industrial Index experienced a drop of roughly 1.7% as trading kicked off on Thursday morning, While both the Nasdaq and the S&P 500 experienced drops of roughly 3% and 2.2%, respectively.
Year-over-year inflation in September was basically unmoved from where the previous month’s reading sat at 8.3%. reduced energy costs created a moderation from the 9.1% inflation rate from June and the 8.5% rate from back in July, although the price of gasoline has since gone back to its upward trajectory.
Policymakers out of the Federal Reserve had increased the target interest rates by roughly 0.75% this past month, a plan which takes place in the wake of two other identical hikes that went out in both June and July, all in an effort to try and act as a pressure valve to assist with elevated inflationary pressures. The continually elevated price levels could spark additional action in the future.
“The Federal Reserve continues to see a bright green light with respect to future interest rate increases,” stated Hamrick. “Based on the latest snapshots of inflation, they believe the target range for the federal funds rate must go higher from here. There’s no pivot yet in sight, only a push to higher ground.”
Those with the Central bank first pegged a near-zero target interest rate and acquired a series of government bonds to try and stimulate the economy during the recession caused by the COVID lockdowns. Many top economists have hurled criticism at the central bank throughout the return to a contractionary monetary regime, making the claim that officials who were also in their response to increasing price levels over the past few years are inflicting undue harm via their intense need to fight inflation.