The Biden effect is starting to materialize. Inflation is now on the rise and at the quickest pace seen since 2008 when the economy collapsed thanks to the housing crisis.
According to the Consumer Price Index (CPI), prices are up 4.2 percent from last year. Gains were at their highest level since September 2008, stoking new inflation fears. Prices have risen dramatically since the pandemic began last year. The most significant increase was in energy prices, which increased by 25%, followed by used cars and trucks, which increased by 21%. After two months of consecutive declines, prices increased by nearly 2%.
AXIOS reported the latest gauge on inflation released Wednesday morning showed that prices rose 4.2% over last year, based on the Consumer Price Index (CPI).
The gains were highest since September 2008, stoking new fears of inflation. Prices jumped significantly compared to the start of the pandemic last year, when lockdowns drove down demand.
Energy prices rose the most by 25%, followed by used cars and trucks at 21%.
Apparel prices grew by nearly 2% after seeing two months of consecutive declines.
The big picture: More consumers have grown worried about rising costs and say they are adjusting how they will spend as a result. However, most economists and the Fed maintain that the price swing will be temporary.
For context: Prices grew 2.6% year-over-year in March as the U.S. administered its 100 million COVID-19 vaccine dose, weeks ahead of schedule.
Consumer prices have been more volatile over the past year than at any point in decades, per Axios’ Felix Salmon.
I’m no economist but it seems to me that much of this is being driven supply, which has been crippled during the pandemic. And not just in America, but around the world.
I’ve commented on this before, but prices for gun ammo have skyrocketed during the pandemic and it’s caused by several issues. One of which is an outsized demand because of all the rioting seen in this country, as people are buying guns at a much higher rate than in the past. When you add to that all of the diminished manufacturing and less frequent shipping because of the pandemic, you have a nightmare scenario where ammo becomes hard to find and very expensive.
Ammo seems to be an extreme example, but I hear from my friends in construction that wood is also skyrocketing. I would imagine it’s suffering from similar pressures.
What we are seeing now is that prices for more basic items are now increasing. Will it continue as the economy slowly recovers? I don’t know. But Biden’s big tax and spend agenda most certainly isn’t going to help.