The Bureau of Labor and Statistics released the January consumer price index today [DATA HERE] reflecting what you already know. The overall inflation rate stands at 6.4%, after the anniversaries of the first two waves of price increases have now tolled.
Inflation is the measure of price increases over time. Following two years of massive jumps in price, we are now cycling through and comparing current prices to the previous period when prices had already skyrocketed.
This gives a false impression of price moderation (hindsight inflation); however, the price of goods and services is significantly higher, and those prices will not drop. The higher prices are now embedded in the economy.
After a brief respite, a plateau, in energy price increases over Nov (0.5%) and December (0.4%), the January energy prices began climbing again (0.6%). This is what we have all noticed in the past three months.
Additionally, “shelter” costs, rent and housing, continue to increase in price (0.8%, January). Overall shelter costs now +7.9% for the 12 months preceding January, 2023, with rents up 8.6% for the period [Table-1].
We have also cycled through the anniversary of the first two waves of massive food price increases, ending January 2022. Despite that cycle, food prices still show an increase of 10.1% for the preceding 12 months. Cereals +15.6%, dairy +14.0%. These food price increases are on top of similar jumps in the period that preceded January ’22. Most of these volatile food price increases are attributable to the overall scale of energy and transportation costs. These prices will never reverse.
The issue is compounded because the inflation rate is still far exceeding the rate of wage growth. This means workers and working families are going backwards and spending more than they earn for the exact same housing, food and energy products they were purchasing a year ago.
This wage squeeze means little to no disposable income, which then applies to the rest of the household checkbook economics. With less disposable income, fewer non-essential products and/or services are purchased by working families. This situation creates the snowball effect of lessened overall economic activity.
(Via CNBC) – […] Rising shelter costs accounted for about half the monthly increase, the Bureau of Labor Statistics said in the report. The component accounts for more than one-third of the index and rose 0.7% on the month and was up 7.9% from a year ago. The CPI had risen 0.1% in December.
Energy also was a significant contributor, up 2% and 8.7%, respectively, while food costs rose 0.5% and 10.1%, respectively.
Rising prices meant a loss in real pay for workers. Average hourly earnings fell 0.2% for the month and were down 1.8% from a year ago, according to a separate BLS report that adjusts wages for inflation.
While price increases had been abating in recent months, January’s data shows inflation is still a force in a U.S. economy in danger of slipping into recession this year. (read more)
According to the wage report: “from January 2022 to January 2023. The change in real average hourly earnings combined with an increase of 0.3 percent in the average workweek resulted in a 1.5-percent decrease in real average weekly earnings over this period.” Workers are working longer hours, making slightly more pay, but the rate of inflation means their actual “real wages” are still dropping.
The way to break out of this cycle is to first unleash the U.S. energy sector and drive down the costs of oil, gasoline, diesel fuel, home heating oil, natural gas and electricity rates. However, the entrenched nature of the climate change ideology, blocks the professional political class from providing the energy sector relief. Both Democrats and Republicans want the Joe Biden “green new deal” energy policy.
FUBAR!
Sundance, I suggest caution about the word “volatile” …. you may have used the word out of familiarity but it can also be simply jargon, which I think it is in your usage here:
“Most of these volatile food price increases are attributable to the overall scale of energy and transportation costs. These prices will never reverse.”
You don’t really mean ‘volatile’ there. Volatile would be varying up and down erratically.
You say in the very next sentence “These prices will never reverse”
So you’d be better off saying something like
“These ever-increasing prices …”
“This incessant rise in food prices …”
That kinda thing
Prices are going up and up and up … we’re not really concerned with price volatility (variability)
I see the same thing in financial reporting
When there’s a big downturn in the stock market, the financial reporters say “A period of increasing volatility” or “Stocks were very volatile this week”, when actually what is happening is a market plunge
There’s usually a bit of volatility associated with that, but that’s not the main and important aspect to report
They’re trying really hard to be polite and not say “stocks declined steeply”
Stocks are heading down
Stocks are in the toilet this week
A downturn in the market
None of which have volatility as the chief and important property
It’s the decline that’s important, not the variability
Just an observation, I’m triggered by it from years of reading stock-market reporting
Nice. Smart
Sorry, Nimrodman, but who cares? Splitting financial reporting hairs doesn’t move the needle one iota. The key question is “ HOW DO WE GET OUR DAMN COUNTRY BACK!”
Stock volatility. …. Investors can take the Vix and put it where the Sun don’t shine.
Nice deflection Nimrod. I wonder if anyone will truly notice…
No way the democrats took seats in 2022 midterms with this amount of pain. No fricken way.
20% plus. Government math is not math.
If you think inflation is only what the Government says at 6.4% you have not bought anything. If you have gone to a grocery store you would likely see it is more like 20% and energy is up in most states. My brother-in-law in California said his electric bill went up $400 per month for his little place in the lower Central Valley.
How would Newsome run for President on the cost of living in his state? He wouldn’t stand a chance, but we know they have found a way to game the Electoral College now.
Like I said last week, the cheapest generic pound of butter is $4.59, uncut. 2+ years ago we were getting it for 99 cents a pound, cut.
I have a household favorite chocolate cake that I make that requires almost a full pound of butter between the cake and the icing.
And yet Canada is making their dairymen flush milk down the drain because quota. That’s not just healthy milk it is cream and sour cream and cheese and butter going down the drain.
That sounds like the kind of policies under FDR that helped prolong the depression.
He who controls the food and water (and energy to transport/maintain it) totally controls the population. Seems like our government, with these globalists in charge, is inching closer and closer to their goal every day.
Just in time for spring..
Dr. Jordan Peterson might help this as he’s setting up a think tank to challenge the WEF. I hope Sundance opines on the topic someday.
He has stated 6 goals, as questions (if I recall correctly):
1. How do we provide food at lower costs to help working families?
2. How do we provide lower cost, cleaner energy?
*** To this, he specifically mentions America lowering our CO2 emissions by 15% … nobody else gas done this … using NATURAL GAS. ***
The think tank will be centered in London and has already signed up two other professors.
Could he get economist Dr. Thomas Sowell to sign on!!??
By my calculations, food has risen 18.3% under Biden, and energy has risen 38%. Both are excluded from the 12.8% that is the official number. As Sundance has reminded us, the rate of inflation is merely the change over 12 months. Those numbers are baked in .
Compare to the pre-pandemic rate of 2019 rate of 1.4% under Trump – INCLUDING food and energy.
Our government lies about the rate of inflation and has been increasingly doing so for 40 years. In the very early l980s, the Bureau of Labor Statistics began revising (rigging) the methodology for computing it. Additional rigging over the next 40 years plus the mathematical compounding effect has now resulted in a stated rate of about half the actual rate today. The reason for doing such was primarily to depress the fiscal burden of the so called ‘cost of living adjustment’ (COLA) that is mandated for nearly all government salaries and other benefits. Therefore, one can assume that a realistic COLA today would be approximately twice the current amount had the BLS continued to use the old methodology.
Inflation is simply a symptom of the process of debauching the currency of a nation/empire and has been commonplace throughout history.
“There is no subtler, no surer means of overturning the existing basis of society than to debauch
the currency. The process engages all the hidden forces of economic law on the side of destruction
and does it in a manner which not one man in a million is able to diagnose.”
John Maynard Keynes
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