From cars to gasoline, surging prices match a 13-year high

In this July 21, 2021 photo, a consumer shops at a retail store in Morton Grove, Ill. Consumer prices rose 0.4% last month, slightly higher than August’s gain and pushing annual inflation back to the highest increase in 13 years. The consumer price index rose 5.4% in September from a year ago, up slightly from August’s gain of 5.3% and matching the increases in June and July.

WASHINGTON — Another jump in consumer prices in September sent inflation up 5.4% from where it was a year ago, matching the largest increase since 2008 as tangled global supply lines continue to create havoc.

U.S. consumer prices rose 0.4% in September from August as the costs of new cars, food, gas, and restaurant meals all jumped.

The annual increase in the consumer price index matched readings in June and July as the highest in 13 years, the Labor Department said Wednesday. Excluding the volatile food and energy categories, core inflation rose 0.2% in September and 4% compared with a year ago. Core prices hit a three-decade high of 4.5% in June.

The ongoing price gains raise pressure on the Federal Reserve, whose officials have repeatedly said the increases will be transitory, and on President Joe Biden, who is facing an economy of slowing job gains and higher inflation. Biden has been accused by Republicans for spurring inflation with his $1.9 trillion rescue package enacted in March of this year.

The unexpected burst of inflation this year reflects sharply higher prices for food and energy, but also for furniture, cars, televisions, and other largely imported goods. COVID-19 has shut down factories in Asia and slowed U.S. port operations, leaving container ships anchored at sea and consumers and businesses paying more for goods that may not arrive for months.

“Price increases stemming from ongoing supply chain bottlenecks amid strong demand will keep the rate of inflation elevated, as supply (and) demand imbalances are only gradually resolved,” said Kathy Bostjancic, an economist at Oxford Economics, a consulting firm. “While we share the Fed’s view that this isn’t the start of an upward wage-price spiral, we look for inflation to remain persistently above 3% through mid-2022.”

The latest inflationary data makes it even more likely that the Fed will soon begin reducing its $120 billion a month in bond purchases, which are intended to keep longer-term interest rates low. Most analysts expect the Fed to announce such a move at its next meeting Nov. 3.

Higher prices are also outstripping the pay gains many workers are able to obtain from businesses, which are having to pay more to attract employees. Average hourly wages rose 4.6% in September from a year earlier, a healthy increase, but not enough to keep up with inflation.

For elderly Americans, however, the increase has resulted in the biggest increase in benefits in 39 years. Monthly Social Security checks will rise 5.9% next year, the government said Wednesday. So will other benefits for veterans and retirees.

One good sign in September was that prices fell or moderated in categories that had been initially pushed much higher by the pandemic. Those declines kept core price increases from worsening.

Used car prices declined 0.7% last month, the second straight drop, after costs soared over the summer as consumers, unable to find or afford a new car, turned to used instead.

The costs for hotel rooms, car rentals, and airline tickets also all fell last month, as the delta spike in COVID-19 cases limited travel plans. Car rental prices had shot up over the summer after many companies sold portions of their rental fleets. Clothing prices fell 1.1% in September, providing consumers some relief after increases earlier this year.

New cars, however, are growing increasingly expensive with costs rising 1.3% in September, and 8.7% compared with a year ago. That is the biggest 12-month increase in new car prices since 1980. A shortage of semiconductors has restrained vehicle production and left fewer cars on dealer lots.

Prices for household furniture, which has faced major shipping delays, jumped 2.4% in September alone, the biggest increase since 1988. Over the past 12 months, furniture costs have soared 11.2%, the most since 1951.



The cost of shoes rose 0.5% in September and have jumped 6.5% in the past year. Children's shoes are up 11.9%, a record-high gain in data that stretches back to the 1950s. Most shoes are imported and are likely caught in supply bottlenecks.

Restaurant owners are paying higher salaries to lure workers who have become elusive in the pandemic and they're paying more for food. And for the fifth consecutive month, that has led to outsized price gains, 0.5%, in September. The cost of a meal at a full-service restaurant has jumped 5.2% in the past year, an unprecedented leap for as long as records have been kept.

Gas prices jumped 1.2% last month and have soared more than 42% compared with a year ago. Electricity prices rose 0.8% in September from August.

Housing costs also rose at a strong clip, as builders say they cannot find all the parts and workers they need to build new homes as quickly as they'd like. Rents rose 0.5% in September and a measure of home prices climbed 0.4%. If sustained, those increases will put significant upward pressure on prices, as those two measures account for nearly one-third of the CPI.

Inflation is far above the Fed's target of 2% annually. Chair Jerome Powell has repeatedly said that the price gains should “abate” next year, bringing inflation closer to the target.

Fed Vice Chair Richard Clarida echoed that view in remarks Tuesday.

“The unwelcome surge in inflation this year, once these relative price adjustments are complete and bottlenecks have unclogged, will in the end prove to be largely transitory,” he said.

Raphael Bostic, president of the Atlanta Federal Reserve, joked Tuesday in separate remarks that “transitory” is now seen as the equivalent of a curse word at the Atlanta Fed. Bostic said that the price spikes mostly reflect the pandemic’s impact on supply chains and added they should eventually fade, but it will likely take longer than many Fed officials initially expected.

The White House said Wednesday that it has helped foster an agreement to keep the Port of Los Angeles open 24 hours a day, seven days a week, in an effort to ease supply bottlenecks and reduce price pressures.

Ports in Los Angeles and Long Beach, California, account for 40% of all shipping containers entering the U.S. As of Monday, there were 62 ships berthed at the two ports and 81 waiting to dock and unload, according to the Marine Exchange of Southern California.

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AP Writer Josh Boak contributed to this story.

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This story has been updated to correct that rents rose 0.5% in September, not 0.4%.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

(19) comments

Joseph Tafoya

Even the progressive democrat media and Biden's ardent supporters are starting to wake up to the fact that Biden and his acolytes are hurting the country. Biden and his brain trust have solely put the economy in a position of failure. Once it starts heading south, and it is, the progressive movement will implode. Once inflation reaches its stride the voters will be the judges of how the Biden administration is handling the economy. Oh, they will blame President Trump, but the voters will have to choose whether they love their country more than they hate Trump.

Mike Johnson

[thumbup][thumbup][thumbup]

Mike Johnson

Well, now Biden's right hand man has weighed in on this crisis, and shows the callous disregard they have for the poor......"White House Chief of Staff Ronald Klain claimed Wednesday evening that the current U.S. economic issues, including inflation and supply chain delays, are just 'high class problems'."

Eric Allin

And yet again, gas is about 20 cents cheaper per gallon in Abq vs SF.

Khal Spencer

I noticed gas was about thirty cents a gallon more than a few months ago. But the glass half full version of that fact is the only thing putting a dent in people buying gasahog vehicles and doing their part to contribute to global carbon emissions are high gas prices.

Robert Fields

Prices will continue to trend upward, though. Oil is being constrained which will push prices higher. Anyone buying new vehicles ought to consider world instabilities that can easily skyrocket prices here. The oil will go where the demand is. If prices go higher in the world, they will go higher here too. It’s already happened multiple times and will do so again. Fossil fuels are an unstable energy supply no matter what the mouthpieces will tell you.

https://www.eia.gov/energyexplained/gasoline/price-fluctuations.php

http://www3.cec.org/islandora/fr/item/2360-renewable-energy-hedge-against-fuel-price-fluctuation-en.pdf

We’ve had a number of opportunities to help people move away from fossil fuels by increasing taxes when prices moved lower but nobody was able to get that past the vocal and influential fossil fuel lobby. Those taxes would have made people think twice about buying wasteful vehicles but instead, low gas prices sent people out to splurge and buy them. It never fails - prices go up and TV stations send reporters out to interview motorists complaining they can’t afford to fill the tanks of their SUVs.

One oil-loving republican here thinks taxes are unfair to the poor. He’s using that as a vehicle to virtue signal (falsely) when he just doesn’t want taxes on gasoline. We could simply credit poor people back for taxes paid any number of ways.

It’s imperative people start paying the true costs of fossil fuels. Fossil fuels cost us many times what people pay at the pump and elsewhere. It’s those hidden costs - delayed costs - that are killing the planet. The fossil fuel industry just loves that they sell you the product and the consequences from its use get decoupled from their profits. All these white knight purse clutching posts about the poor are completely ignoring that all fossil fuel use is biting us in the hiney and destroying the planet and our future.

We need to start getting smarter about fossil fuels. People need to wake up to the instabilities in price and supply. These aren’t the ‘90s where gas was cheap, reliable, and the consequences of their use weren’t widely known. We know better now.

Khal Spencer

I am old enough to remember the '73 and '79 gas lines and remember them well enough to not invest in something bigger than I need and to try to live where I don't need to drive much, i.e., walkable community near stuff I need to go to.

As far as my Old Belchfire, if I had it to do over, I would not have the car I do now as at the time, we had two dogs and are now down to one dog and wanted a vehicle big enough for vacation travel with both hounds.

Modern extraction has made us more secure in acquiring vintage bug juice but we are extracting hydrocarbon faster than Ma Nature makes it. At some point I think the Hubbert Curve will stop playing games with us and just tank. But I'm not a petroleum geologist so take that with a large sack of salt.

Mike Johnson

As a petroleum geologist, I can tell you the Hubbert Curve was invalid the day it was published, as old M. King had no way to know or factor in the price of oil and gas and the economic side of the equation, nor imagine the huge price swings that could occur. He was only a geologist, not educated in such things, purely theoretical. Yes, depletion will occur at some point, but that will be more determined by economics than physical petroleum in the ground, it is ubiquitous. If things had gone the way the market would have taken it, massive government R&D would have been done to make alternative sources much, much cheaper and just as reliable. Instead, the politicians spent our money subsidizing alternative energy that in most cases was 50+ year old technology and mandating its use. That is where we find ourselves today, it could have been better and more efficient, and we would have more than single digit % of wind and solar energy in the mix. BTW, I just took a trip to Reno and back and averaged 29.9 MPG in my new 500 HP Corvette according to my trip calculator. Also as an aside, M. King interviewed me for a job at Shell R&D in Bellaire, Texas when I graduated. I turned them down......

Robert Fields

There was just recently a discussion of peak oil (as presented by M.K. Hubbert) and how we are apparently about to hit it, but if we are interested in a planet that can support life somewhat as we know it, we need to drastically reduce our use even beyond what peak oil forces us to do.

https://www.cnn.com/2021/10/13/energy/iea-world-energy-outlook-climate/index.html

There have been discoveries of more oil and gas pools to plunder, but those only provide a small relief from peak oil in general and may even be the spark that starts a war between superpowers. China wants the South China Sea because of its reserves and so is trying to belligerently muscle in on a number of other nations’ territorial claims. Fossil fuels are impacting us and the world in many ways. Threatened attacks on various militaries are just one of them.

Enhanced extraction is seeing decreasing yields as fields empty and even if even more can be teased out, it’s likely only going to get more expensive. But it needs to stay in the ground. Hopefully more will see the security in not buying cars that are at the limits of what they can afford, and hopefully they will also understand the security in not buying cars that are beyond the limits of what the planet can afford.

Mike Johnson

The cruelest and most harsh regressive tax on the poor is inflation, and Biden and his left wing/progressive/Democratic Socialist policies are the problem. This makes inequality much worse, and he is in charge of it and owns it now.

Khal Spencer

Yep. Sure is cruel, and that's what worries me about this $3.5T Dem plan to spend like drunken sailors at a waterfront bar. Who gets to pay depends on whose voodoo economics one believes.

Mike Johnson

[thumbup][thumbup]True Khal, hopefully my moderate D heroes will save the day. We really need many more like them than we have.

Robert Fields

I also hope democrats can save the day. Republicans sure aren’t looking like they have the brains or guts to do it. Roll the tax structure back to the 1980s tables and let’s start making the rich pay their fair share.

Robert Fields

We need to roll the tax structure back to what it was in the 1980s before republicans decided the rich should pay no taxes. We’ve increased taxes on the middle class while letting the rich skate. It’s way past time to reinstate fair tax laws.

Robert Fields

You do love to paint with a wide brush, don’t you, Mike? Too bad you’re painting the wrong house.

There’s a whole litany of things causing inflation and part of it is due to the pandemic which was completely mishandled by the orange bloatus and his cray-cray fringe right followers. As supply chains get strained and products see shortages, prices rise through supply and demand.

You are right about inequities hurting the poor. That’s why we need better social programs and education, and safety nets - all the things that decades of cutting taxes on the rich have caused to be under funded and cut.

All of those tax cuts that have further disadvantaged the poor are from republicans, though. You missed the entire barn on that one, sport. Trump even joked to his Mar a Lago guests that he made them rich (they were already rich) with his last round of tax cuts. Then republicans cry about deficits and refuse to help this country with works projects we not only desperately need, but that would employ more people.

Not Biden. Republicans. That’s who owns this country’s fiscal problems. The pigs belly up to the trough every chance they get.

Mike Johnson

Oh, I see so this, like everything else that goes wrong in Biden's presidency, is once again Trump's fault. How convenient.....I think the midterms will prove people are not that stupid. There will be many more Manchins and Sinemas elected, who know the moderate/conservative policies are far superior to Democratic Socialist ones, hide and watch.

Emily Koyama

The supply chain issues and inflation have been readily apparent as a growing problem since last year, yet only YESTERDAY, Biden gives one of his staged speeches about how he is putting together a "team" to tackle the problem. I guess that's why he's called "slow Joe".

Robert Fields

Not just Trump’s fault. Republicans have been cutting taxes on the upper income brackets since Reagan while driving up the deficit and cutting social programs. Trump just said it out loud in earshot of microphones.

I hope the midterms prove people aren’t stupid but they might disappoint me. I wouldn’t be near as anxious if I thought more understood who the real villains are in this melodrama - republicans. You guys have lost your minds with the likes of Bobert, Greene, Jordan, Gaetz, and the whole rest of the Trump-licking offerings. Republicans want to go back to iron lungs for people stricken with polio and other diseases. Ask Gym Jordan about that one. Your party uncorked the bottle of vaccine hesitancy and now republican politicians have to feed the crazy to stay in power.

There’s a few republicans standing up for the country like Liz Cheney and others. You’ve got republicans now pledging to vote straight democrat to try to purge your party of all the madness. And that madness includes everything from energy to taxes to social programs to voting rights. The republican party has dug its own very deep hole.

https://www.washingtonpost.com/opinions/2021/10/11/im-no-democrat-im-voting-exclusively-democrats-save-our-democracy/

But while you guys attack Biden, it comes after republicans try to pull the rug out from under him. You’re like the kid that knocks over and breaks the vase then points at the nearest other kid to claim they broke it. Trump set up the Afghanistan withdrawal for failure by forcing the short deadline. We needed to get out but Trump made it impossible to do it right. Trump slashed taxes on the rich which caused huge deficits right when the country was entering the covid crisis.

Democrats have their own issues but republicans have made government into a game of Jenga. We can’t play games any more. It’s time to actually fix problems and that isn’t something republicans seem to want to do. They seem to like sabotage.

Jim Klukkert

Mike- your reference "Democratic Socialists scum" is totally not helpful, and would lead any reasonable person to believe that your positions are constructed of Horse Potatoes.

So please desist from such invective, or be taken as an angry & foolish old white guy.

Your choice, and no other options come to my mind.

Thanks

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