The U.S Bureau of Labor Statistics published its monthly Consumer Price Index earlier this week, revealing that October was not the inflationary reprieve that many in the ‘transitory camp’ had hoped for. Since October 2020, consumer prices have increased by 6.2%, the largest such increase since 1990. While the usual suspects of the post-pandemic pricing surge have remained largely unchanged – Energy prices increased 30% while Used Cars and Trucks increased 25.4% – recent months have witnessed a substantial uptick in food prices, with Meat, Poultry, Fish, and Eggs increasing by 11.9% since last October. Between the global energy crunch, covid flares, and the Great Resignation, there are few reasons to predict the rest of 2021 will be any better.
Although Wall Street has taken the recent inflationary data in stride (for the most part), Main Street has proven far more tepid. This past Friday, the University of Michigan published preliminary results for its Consumer Sentiment Index, which measures how American consumers view prospects for their finances and the general economy. The publication indicated a 10-year low in consumer confidence, with 1-in-4 Americans citing a reduction in their standard of living as a result of inflationary pressures. Half of all families surveyed further indicated that they anticipate bringing home a reduced paycheck next year after accounting for the ongoing bout of inflation.
October data has seemingly dispelled the ‘transitory’ messaging from the talking heads; now all that’s left to do is watch the Fed.