Report: Inflation impacting Minnesotans more than national average
Americans have had their incomes hit hard by inflation over the last three years, as Figure 1 shows, with the annual change in the Consumer Price Index rising from 1.4%…
Last month, President Biden responded to the July inflation data – which showed the Consumer Price Index (CPI) flat over the month – by tweeting:
Data released by the Bureau of Labor Statistics (BLS) today show that inflation is back.
The BLS reports:
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in August on a seasonally adjusted basis after being unchanged in July…Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.
The BLS noted that:
Increases in the shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly all items increase. These increases were mostly offset by a 10.6-percent decline in the gasoline index.
Food and energy prices are sometimes said to be more ‘volatile’ than other prices so there is a measure of ‘core’ inflation which strips these out. The BLS reports:
The index for all items less food and energy rose 0.6 percent in August, a larger increase than in July. The indexes for shelter, medical care, household furnishings and operations, new vehicles, motor vehicle insurance, and education were among those that increased over the month. There were some indexes that declined in August, including those for airline fares, communication, and used cars and trucks.
Over the year to August:
The all items less food and energy index rose 6.3 percent over the last 12 months. The energy index increased 23.8 percent for the 12 months ending August, a smaller increase than the 32.9-percent increase for the period ending July. The food index increased 11.4 percent over the last year, the largest 12-month increase since the period ending May 1979.
The story here, then, is of persistent, broad based, upward price pressures being offset, largely, by plunging gas prices. In part this is due to releases from the strategic petroleum reserve. Reuters reported yesterday:
U.S. emergency crude oil stocks fell 8.4 million barrels last week to 434.1 million barrels, their lowest since October 1984, according to U.S. Department of Energy (DOE) data released on Monday.
The release from the Strategic Petroleum Reserve (SPR) in the week ended Sept. 9 was the steepest draw since May. It comprised of about 6.3 million barrels of sweet crude and around 2 million barrels of sour crude.
President Joe Biden in March set a plan to release 1 million barrels per day over six months from the SPR to tackle high U.S. fuel prices, which have contributed to soaring inflation.
The clear lesson here is that increased supply will act to drive down prices. In our new report ‘Energy Leadership: How American Energy Production Can Make The World Safer‘ we explain how this can be done on a long term, sustainable basis, and make the world safer, too.
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