Staff Reports
Inflation is back in the news again, and not in the way anyone wants. The latest report shows that the inflation rate for October is now sitting at a delightful 2.6%, a jump from September’s already eyebrow-raising 2.4%. Meanwhile, if anyone out there thought they could escape the pains of inflation by skipping meals or walking instead of driving, think again. The so-called “core rate” of inflation—excluding those pesky food and energy costs—has decided it’s not going anywhere soon, creeping up to a staggering 3.3%. Talk about a core issue!
With inflation on the rise and the core rate far exceeding the Federal Reserve’s target of 2%, it looks like Donald Trump, soon to be back in office, has quite the mess to clean up come January. While the experts predict no immediate panic from the Federal Reserve, one can’t help but wonder if they’ll need a crystal ball or a magic wand to navigate this economic quagmire. After all, 3% core inflation for three straight months is like the economic version of treading water—it’s exhausting but you never quite get anywhere.
In the land of energy and groceries, it appears that prices are taking their sweet time to cool off. Though gas and general grocery prices have leveled out somewhat, shoppers are still feeling the sting when it comes to certain items. Eggs have apparently decided they’re worth their weight in gold—rising a staggering 30% in October. Juice? That went up 14%. It seems that breakfast for many families is about to become a rather luxurious affair.
Even the folks at the Federal Reserve, who typically exude calmness like a cool breeze, are acknowledging that inflation is proving to be “sticky.” Fed Chair Jerome Powell believes it’s not “a big issue,” which is a bit like saying a volcano isn’t a big deal until it erupts. And while there’s talk of interest rate cuts still being on the table, it’s clear they’re waiting to see if the economy turns any clearer than 2020’s mud puddles.
More #Inflation: The inflation rate for October rose 2.6% after a 2.4% increase in September. Excluding food and energy costs, the "core rate" of inflation rose by 3.3%.https://t.co/k6aIBxXCMR
— Zayphar has always been colorblind (@Zayphar) November 14, 2024
Despite the rising costs, there’s some uncharacteristic optimism in the stock market in light of Trump’s recent electoral success. Investors are banking on tax cuts and deregulation to supercharge the economy, though bond yields tell a different story, hinting at a little anxiety about inflation spiraling out of control. Auto insurance has spiked 14%, and housing is not far behind, climbing nearly 5%. Coincidence? Or yet another hiccup from the pandemic’s messy aftereffects, where the demand for homes is going up while the supply sits in a queue at the DMV?
Ultimately, the prevailing wisdom from the Federal Reserve is that inflation will slowly worm its way down to that oh-so-desired 2% target—eventually. Of course, they’re banking on consumer expectations. If people think prices will only rise by a modest 2.9% over the next year, that might help keep inflation from running wild. But it’s worth noting, when it comes to inflation, hope is not a strategy, and consumers might as well grab a helmet because the ride isn’t over yet.
