Rising inflation worsened in September by 0.4 %. Food and rent costs were the two indicators that increased the most during that period, accounting for almost half of the increase experienced during that month.
The consumer price index, excluding the price of food and energy, rose 0.2 %.
September left Americans with food 0.8 % more expensive at supermarkets and chain stores and the cost of food delivery increased by 1.2 %, while the price of energy rose by 1.2 %.
According to the Bureau of Labor Statistics, prices rose 5.4 % in the last year.
Higher prices on supermarket shelves are making what markets feared a few months ago a reality for Americans. Iconic fast-food chains Chipotle, Shake Shack, McDonald’s and Taco Bell have also had to raise prices.
Soybeans, wheat, and corn reached their highest prices since 2012, while sugar again reached its highest price in five years. Rising commodity costs impacted American food producers, who have undoubtedly had to pass on some of the cost increases to their customers with higher prices.
Although the agricultural commodity market has its own reasons for rising prices — such as declining yields in acreage — it is undeniable that the rising cost of food and all commodities was impacted by fuel costs that mirror somewhat the rising cost of production.
Oil futures contracts have risen 64 % and the price of natural gas has doubled in the last six months, reaching a seven-year high. Heating oil has risen 68 % and the cost of gasoline has increased by a dollar in the last year, bringing the price per gallon to an average of $3. Over the last twelve months, the cost of energy, in general, has increased by 24 %.
Naturally, fuel costs impact transportation costs, which are already on the rise due to labor shortages in the transportation, warehousing and storage industry. Many industries in the United States have seen their costs altered due to lack of personnel.
Some suppliers, in order to protect themselves from inflation, have decided to increase their inventories of non-perishable products. Increased demand for products by suppliers to avoid exposure to future inflation creates its own costs.
How is inflation being transferred from China to the United States?
Some of the inflation experienced comes from across the Pacific Ocean. With rising coal costs many Chinese cities have faced continuous power outages as well as significant manufacturing delays.
Companies such as Apple and Tesla have canceled part of their production due to the constant stoppages in Chinese manufacturing companies, which tend to deal with the power rationing that occurs in the communist country.
As the United States’ main trading partner, bottlenecks in Chinese production naturally impact prices in America. Delays at factories are compounded by delays at ports.
The latest outbreaks of Covid-19 in China have imposed serious restrictions on sea and air trade, leaving thousands of containers waiting in ports to be shipped, while hundreds of ships wait in Chinese ports to finally embark — and then have to wait long times to disembark on American shores, whose ports are just as congested.
Rising inflation is starting to have an impact on the US economy
According to its latest consumer survey, the New York Federal Reserve expects inflation to remain around 5.3 % in the short and medium-term, so Americans will have to get used to higher prices in the future.
One of the tangible consequences of rising inflation has to do with the updating of social security payments. More than 70 million American pensioners are about to receive the largest increase in their social security in more than 39 years.
Payments will grow by 5.9 %, the highest increase since 1982. This increase is intended to cover the rising cost of living, so although retirees will receive nominally more money, their purchasing power will change relatively little.
Meanwhile, financial markets are operating more cautiously in the face of rising inflation. More and more investors are beginning to claim returns on their capital. According to the financial portal Zero Hedge, the price of technology stocks has shown itself to be especially sensitive to rising inflation.
Some organizations — including the International Monetary Fund — have moderated their growth expectations for the U.S. economy due to the uncertainties caused by the expansion of the delta variant of the coronavirus and the growing inflation in the country and the world.