‘Nowcast’ Inflation Tracker Suggests Rising Price Pressures
The trend of high inflation rates over the past few months looks set to continue through October, according to a recent estimate from the Federal Reserve Bank of Cleveland.
October’s consumer price index (CPI), a measure of inflation, is expected to rise more than 0.8% from September, according to the Fed’s “Nowcast” inflation forecast. Core CPI, which excludes food and energy, is expected to rise 0.54%. The Fed expects the annual CPI to be at 8.14% in October, with a core CPI at 6.58%.
Data from the US Bureau of Labor Statistics shows that the annual CPI has remained above 7.5% for every month this year. It peaked at 9.1% in June and 8.2% in September.
The continued high rate of inflation under the Biden administration is eroding people’s incomes. According to a report from the Federal Reserve Bank of Dallas, 53.4% of American workers saw their inflation-adjusted real wages fall between the second quarter of 2021 and the second quarter of 2022.
“For the 53.4% of these workers in the second quarter of 2022, the median decline (i.e. half of the declines were larger and the other half smaller) in real wage growth was 8.6%,” the report said.
Meanwhile, the 12-month Producer Price Index (PPI), a measure of annual wholesale inflation, jumped 8.5% in September. Experts worry that the high PPI is keeping consumer prices up.
“The larger-than-expected rise in producer prices in September adds to concerns about entrenched inflation, even as some commodity prices decline and supply shocks ease,” he said. economist Eliza Winger, according to Bloomberg.
Fed action, election problem
The Federal Reserve has implemented five consecutive rate hikes, including three hikes of 0.75 percentage points. However, inflation remains high.
Federal Reserve Chairman Jerome Powell said the central bank intended to bring inflation back to its target rate of 2% and would continue to raise interest rates until that occur. But as interest rates continue to rise, consumer spending may suffer, clouding the outlook for economic growth.
Ahead of November’s midterm elections, Sen. Roger Marshall (R-Kan.) criticized the Biden administration for its failure to control inflation.
“Kansas and all Americans are currently paying 13.5% more since…Joe Biden took office. In return, we see lower wages, depleted savings accounts and higher cost of living across the board,” he said in a statement.
“The American people can no longer afford Joe Biden’s financial anxiety and faltering economic agenda. To truly end this crisis, we must end the rule of the Democrats in Washington, DC”