(PatriotWise.com)- In April, consumer prices rose a staggering 4.2% compared to the year before, while inflation accelerated at its fastest pace since September of 2008.
And the hits just keep on coming.
Consumer prices in May surged even higher. According to the Department of Labor, the Consumer Price Index rose 5% compared to a year ago – an increase that was “higher than expected.” The consensus forecast predicted a 4.7% rise over May of 2020.
This is the biggest CPI gain since August 2008 – which was just before the onset of the 2008 financial crisis that sent the US economy into the worst recession since the Great Depression.
Core inflation, which doesn’t include volatile food and energy prices, was expected to rise 3.5% compared to a year ago. In reality, core inflation jumped 3.8% — the fastest pace of increase since May 1992.
Fueling the rise in core inflation was the cost of used cars and trucks which continued to rise sharply in May by 7.3%. Overall, used car prices are up 29.7% compared to May 2020.
Treasury Secretary Janet Yellen still believes this rapid rise in consumer prices and inflation is only “transitory.” In testimony before the House Appropriations Committee last month, Yellen said she expected this trend to continue through the end of the year.
The White House echoed Yellen, saying the inflationary effects currently underway are “transient” and will be offset by greater gains in the overall economy. In the meantime, the Federal Reserve is fine with inflation running above the 2% target threshold in order to help reach full employment.
The economic bad news is still being blamed on the COVID pandemic. The lockdowns resulted in reduced production among manufacturers. Now with the lockdowns ending and demand rising, manufacturers are scrambling to catch up. As a result, with decreasing supply comes increasing prices.
The question remains, of course, if the Biden Administration is right in its predictions and this staggering rise in consumer prices and inflation will level off the further we get from the lockdowns.
After the April numbers came out last month, Jesse Kelly had small business expert Carol Roth on his show to discuss the rise in prices and inflation. Though the interview is a month old, it is still valuable in understanding the current situation.
— Carol Roth (@caroljsroth) June 10, 2021