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Bidenflation: Prices Rises Twice as Fast on Soaring Gas, Highest Inflation in 7 Months

Higher gasoline prices forced Americans to spend more in August and pushed up the Federal Reserve’s main measure of inflation, providing more evidence that the path to lower inflation is unlikely to be a smooth one.

The personal consumption expenditure price index, which the Fed uses in its official inflation target of two percent and the publicly released projections of policymakers, rose by 0.4 percent, twice the pace of the prior month. The increase was in line with economist expectations.

Compared with a year earlier, the PCE price index is up 3.5 percent, an acceleration from July’s 3.3 percent.

Higher energy costs were the driver of inflation in August. Core prices, which exclude food and energy, rose by a more moderate 0.1 percent in August. Comapred with a year earlier, however, core prices are up by 3.9 percent, more than the headline number.

A month earlier, core prices had jumped 0.2 percent from the prior month and 4.3 percent from a year earlier. The year-over-year figure was revised up slightly from the original estimate of 4.2 percent.

The Federal Reserve and many economists look at core inflation as a better measure of underlying inflation and therefore a better indicator of future inflation trends. Critics say that too much focus on core inflation can lead policymakers to underestimate the impact rising food and energy prices have on households. Fed chairman Jerome Powell has insisted he pays careful attention to headline inflation as well as measures such as core inflation. He has also frequently mentioned that he watches what some now call “super-core” inflation, a measure that strips out housing as well as fuel and energy.

The sharp increase in the price of oil has disrupted the decline in inflation. It shows no sign of let up. With the U.S. strategic petroleum reserves depleted after unusual and large releases by the Biden administration starting before last year’s midterm elections, there’s no ready source of new supply to push prices back down.

U.S. production is seen as unlikely to rise because it is already at high levels and investors are hesitant to commit capital to extracting or refining fossil fuels in an era when climate change policies are declared oil, gas, and coal public enemies.

Consumer spending rose by a seasonally adjusted 0.4 percent in August, Commerce Department data showed Friday. That suggests that consumers were able to keep up with higher prices by shifting consumption to the gas pump and away from other goods and services.

Breitbart

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