Civic Register
| 11.15.21

Inflation Rate Reached 31-Year High in October as Prices Surged 6.2%
How do you feel about the rise in consumer prices?
What’s the story?
- The Bureau of Labor Statistics (BLS) reported last week that the all items consumer price index rose by 6.2% over the last 12 months through October, which is the highest rate recorded since November 1990 and more than three times the Federal Reserve’s target rate of 2%.
- Month-to-month consumer prices rose by 0.9% in October on a seasonally adjusted basis. That’s notably faster than the 0.4% increase measured in September and equal to the 0.9% increase in June, which makes it tied for the largest monthly jump since a 1% spike in June 2008.
What goods did prices increase the most for?
- Here’s a rundown of the common items which have seen the largest increase in inflation year-over-year (notable monthly changes in parentheses):
- Fuel oil increased 59.1% over the last 12 months, including a 12.3% increase from September to October.
- Gasoline prices for all types of gas increased 49.6% over the last 12 months.
- Utility gas service (piped) increased 28.1%.
- Used cars and trucks increased 26.4%.
- Bacon increased 20.2%.
- Beef prices increased 20.1%.
- Eggs increased 11.6%.
- Fresh fish and seafood increased 11%.
- Televisions increased 10.4%.
- New vehicles increased 9.8%.
- Women’s dresses increased 9.2%.
- Computers increased 8.4%.
- Baby food increased 7.9%.
- Moving, storage, and freight expenses increased 7.9%.
- Apples increased 6.7%.
- Electricity increased 6.5%.
- Men’s pants and shorts increased 6.3%.
- Peanut butter increased 6%.
- Canned fruits and vegetables increased 5.3%.
- Milk increased 4.3%.
What is inflation and how is it measured?
- Inflation is a measure of the decline of purchasing power for a given currency over time, which in the U.S. means that a dollar effectively buys less than it did in prior periods because prices rise.
- The most common way inflation is measured is through the Consumer Price Index for Urban Consumers (CPI-U), which shows changes in prices paid for a “representative basket of goods and services” by an urban consumer group representing about 93% of the U.S. population.
- CPI-U includes food, energy, commodities like cars and clothes, plus services such as rent and healthcare; and the relative importance of each to the overall basket shifts according to its proportion of all spending in a given month. This overall number is known as “headline” CPI, although economists also track a metric called “core” CPI which excludes food and energy because those categories tend to have more volatility.
- The Federal Reserve aims to keep inflation at about 2% as part of its dual mandate of promoting stable prices and full employment, as a modest amount of inflation is viewed as an optimum policy in terms of encouraging consumer spending without penalizing savings and investment. When inflation starts to get out of control, the Fed raises interest rates to encourage more savings and less consumer spending.
— Eric Revell
(Photo Credit: iStock.com / sefa ozel)
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