Consumer prices rose by 8.5% annually, according to March CPI numbers just released by the Bureau of Labor Statistics. That inflation rate, the highest in 41 years, comes thanks to staggering food prices, which rose by a full percentage point in just the past month, and gas prices, up nearly 50% over the past year.
The Fed, like other Western central banks, claims to aim for a 2% benchmark for inflation. Despite inflation consistently rising over the past year to the highest point in four decades, the Fed waited until just last month to impose its first rate hike in four years, and even then used Vladimir Putin’s invasion of Ukraine to choose a measly 25 basis points rate hike despite knowing full well that it was not enough to stanch soaring prices.
So consider this: In the past two months alone, the consumer price index has risen by 2%, or the entirety of what central bankers claim to tolerate over the course of a full 12 months.
The pajama class will smugly retort that central bankers actually only care about core CPI, that is, the index without those volatile categories of food and energy. But as inflation has come to cost the average person $100 a week, the increasingly regressive nature of the catastrophe ought to take precedence over “full employment,” The Current Thing of the Week, or whatever pet project overpaid financiers in Faconnable care about today.
In the past month alone, the price of food at home, the sort relied on by workers unable to afford dining out, increased by 1.5%. Fuel increased by 22.3% and rent by another 0.4%.
Inflation always disproportionately affects the poor, even when core CPI outpaces CPI. Wealthier folks can always downgrade from Whole Foods to Trader Joe’s, cancel that expensive vacation, take worn shoes to the cobbler, and postpone date nights downtown. But at a certain point, poor people already penny-pinching are stuck.
Unless you can listen to the Biden administration and simply shell out the average $63,000 for an electric car — that is $15,000 higher than the overall industry average — the commute to work will never magically require less gas. A family already splitting bedrooms and bathrooms will never magically fit in a smaller apartment, and growing children will never magically need fewer calories. So, if you’re already living paycheck to paycheck, a nearly 14% increase in meat and poultry prices over the past year means the only way the children get fed is if the least healthy options in the grocery store are chosen or if the parents have to start skipping meals. If the finance class still smugly wants to defend the Fed’s obsession with core CPI, this is the logical conclusion: that the people who need price stability the most are those forgotten by the world’s most powerful central bank.
