The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a
seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment.
The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food
index rose 1.2 percent in May as the food at home index increased 1.4 percent.
The US will have half point interest rate increases at its next couple of Federal Reserve Meetings.
SOURCES: U.S. Bureau of Labor Statistics, Meet Kevin
Written by Brian Wang, Nextbigfuture.com
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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18 thoughts on “Monthly US Inflation at 12% Annualized and 8.6% Over Last 12 Months”
Money does that. Nowhere to hide now
Why is the inflation not stopping? I thought that they had stopped the stimulus by now? And if so, why does the inflation continue?
The fed stopped QE in March. If they stopped stimulus this graph disagrees with you. https://fred.stlouisfed.org/series/M2SL
Lots of reasons.
There is an entrenched expectation of inflation that leads to more inflation.
Inflation is still working its way in to raw material costs which increases the cost of future goods.
Energy is being made more expensive in multiple ways and energy is what the entirety of our civilization is built on. Expensive energy means expensive food, expensive logistics, expensive products.
They may have stopped the specific stimulus that triggered this, but our current level of deficit spending is plenty high enough to keep it going. The real question is why inflation held off as long as it did.
But another key factor is the administration’s ongoing efforts to reduce the availability of fossil fuels, and generally turn oppressive regulation up to 11. Inflation can be caused by an increasing money supply chasing a fixed supply of goods, but it can also be caused by a fixed money supply chasing a shrinking supply of goods. We’ve got both sources of inflation at work right now.
I don’t think the administration’s oil policies have impacted oil yet. The oil issues we are having are mostly because over 100 oil companies went bust in April 2020 when the bottom fell out, because people stopped driving. True, the administration could have helped those companies, keeping them afloat with loans and such. But I did not hear anyone saying we should do this or oil was going to skyrocket and damage our economy. Take a look at our production figures: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W It is obvious that after April 2020 production fell, and it is pretty much at the same level now as it was in May 2020. That oil that folded is not being pumped. That 1.1 million barrels more a day would make a difference.
And, of course, all the Ukraine stuff, and actions to punish Russia, have made an oil shortage in Europe.
The administration could take steps to get the fields that have been shut down back up and running. Either accelerating reorganization, or the rapid sale of these fields and other resources to other companies, with incentives to get pumping quickly. Also, we need punishments for companies hording supplies, hoping to drive up costs higher, if that is a factor.
If the administration had permitted the pipeline construction to continue, and leased oilfields in the Gulf of Mexico, it would still take 3+ years before any of that went online. We may feel it, but it is delayed.
With these prices, one way or another production is likely to grow. Obviously, the quicker it does, the better.
The supply of other things is indeed also a factor. I heard some Canadian company bought all the saw mills and paper plants, and are using that to drive up prices. And, indeed, it does look fishy how wood a paper spiked so sharply. If this is what happened, that must be broken up. Competition must be restored to lumber and paper.
Long term, there are many things we can do to reduce the amount of oil and natural gas we need.
Inflation becomes self sustaining at some point. People raise prices because prices are rising.
Last year inflation has hit things. This year, inflation will be services.
Prices will continue to rise until it becomes more painful to raise prices and the keep them the same. ie, you will lose customers and close down if you raise prices.
The inflation isn’t stopping because the naked money printing isn’t stopping. Inflation is not an increase in prices; it is an increase in the money supply which may lead to increased prices. We know what the inflation is because the money supply is well known. You can just go look at M2 and see that it increased on average 7% per year for the last 20 years, which is (coincidentally, I’m sure) very close the average increase of housing and stocks over the last 20 years.
What happened over the last 20 years is that the inflation went into stocks and housing mostly and didn’t get chased into food, energy, knick-knacks and fertilizer as much; now it is being directed towards consumer staples, but it’s not really that much worse than it has been.
The consumer price index is a bogus measure of “price inflation” intended to hide the bad effects of (monetary) inflation.
Hedonic adjustments (the new iphone is 10% more expensive, but we think it is 7% better, so that’s only 3% inflation)
Substitutions (pork may have increased by 10%, but you can use chicken instead, which has increased only 5%, but we think the chicken is 2% better quality so it’s only 3% inflation)
Owner’s equivalent rent (sure you may have had to pay 10% more this year to buy a house or an appartment, but if you were renting the thing you bought it would only have increased by 2%).
We have to pump more oil, a lot more oil. And we must take actions to end the gouging on lumber and high paper costs. And I don’t think the bird flu outbreak in the poultry is an accident. We need to protect our farms and investigate. Get security cameras, and such. Trump and Biden have been using war-like terms about the economy. Ended is the more cordial “trading partners” stuff. Why? I see no reason why. Compete! This assumption that we can’t compete is idiotic. Delete the NRC! It uses utterly refuted science to justify stupid measures to make nuclear 3x more expensive than it should be. Bring back the AEC! We need plants built by the dozen. And introduce strong measures to prevent gouging for electricity.
Reduce oil consumption, but without getting less done. Without leaving people in the dark and the cold, or alone at home because they can’t afford to drive anywhere. There are hundreds of ways to do that, each taking a nibble out of the problem.
All new tires must be low rolling resistance tires.
Shave the concrete highways that are not shaved to make them smooth.
Electrify military training equipment used on military bases. They can always add sound, and electronics can attenuate the performance to make it identical.
Electrify port tugboats and other short range tugs.
Reduce speed of Navy ships except when there is genuine risk.
Require regenerative breaking on all last mile delivery vehicles, and city cabs, perhaps Uber, Lyft and such as well.
Truly ban the sale of incandescent bulbs (they are actually going to do this, but they are allowing it to continue to July 2023…there is no need for the delay, in my opinion). Somehow I doubt that applies to vehicles. And they need to reduce the brightness of headlights, and require them to be a warmer color, say no more than 3,000k.
We need more bypasses, lanes, tunnels and bridges.
We need automated parking structures in all congested downtowns, to reduce all the wasted fuel from people looking around for parking spaces.
All new cars, trucks and motorcycles should have effective breaking regeneration of some kind.
All new pickup trucks should be electric, natural gas, or propane, or have “city” efficiency of 40 mpg or better.
Forget “tax credit” have instant rebate on ALL electric cars and double on solar cars that get 30+ miles of solar a day.
All new furnaces, water heaters, clothes dryers, and dishwashers must be heat pump/hybrid systems. And there should be incentives to replace the old systems.
All new gardening equipment should be electric, natural gas or propane…no more gasoline or Diesel. And professionals can’t use old gasoline or Diesel equipment.
Disposable plastic water bottles must contain 32 oz or more of water.
Program to electrify farms using solar, 50,000 charge cycle sodium batteries and electric tractors (also using those batteries) and other equipment.
Similar program for mines that are already generating their own power to get them switched from Diesel to solar.
Similar program for logging.
Overhead electrical lane for the whole Interstate Highway System, that semis, large campers, and buses can use. And incentives for extending it to some of the State Highways (the Controlled-access highways that are not part of the IHS).
Getting farms, mines, and lumber electrified is also very good for stabilizing prices for important commodities. As does having electrified semis to get stuff to market.
Your recommendations may eventually get implemented – but “eventually” is probably relatively long term by default, due to heavy capital investment requirements of a lot of them.
They might happen faster if the government started printing money again and handed it out only in the “right” ways. I expect that’d be controversial, and I doubt the Repubs would do it right if they win big come November, even if they decided to start big spending. So a delay of 2-3 years for any such targeted spending to happen. (MAYBE the Repubs would be up for the NRC to AEC attitude transition you suggest.)
So the biggest factor without big targeted spending, that might push for reducing oil consumption, would be the high price of gasoline. Back in the 70’s, high gas prices got a lot of small cars sold, and eventually got the MPG of larger cars up to a rational level. Today it’d probably drive a transition to hybrids and BEVs. However, my guess is that if the Repubs win big in November, they’ll push to get gas prices down via the most expedient method – a mix of drilling subsidies, pipeline authorizations and maybe reducing or shutting off oil/oil-product exports – matching their focus on “energy independence”.
“True MMT has never been tried.”
– Quote from somebody in 2027
Man have you got that right. Powell comes out using a walker in 2027, when a can of coke cost $999.99. It was transitory, transitory I say (Shouts at sky).
Calling things “transitory” is such a joke. Is inflation a non-issue if it only lasts 2-3 years?
In the grand scheme of things a 75 year lifetime is transitory. The universe is transitory.
M2 has increased on average 7% per year over the last 20 years. There’s no sign of it stopping. People who already had a home and a 401k were fine with 7% inflation when it was directed towards driving up the price of a home and their 401k. When the stimulus and dislocation of the pandemic redirected that new money towards consumer goods, inflation suddenly became a bad thing.
No. 7% increase in M2 per year was always a problem. Young people are checking out of society because they feel they will never be able to afford a home on two incomes that their grand parents could buy on a single income. The price of housing increased so quickly, 10-20% per year at times, that even a sensible downpayment of 20-25% was racing away faster than they could save money.
It didn’t happen because of anything real. Because there were too many people, too little land or anything like that. It happened because of naked money printing directed towards mortgages.
According to shadowstats.net (they try to reproduce older metrics for measuring inflation) Real inflation is more than double the publicly released number.
So over 17%
We enacted $5 trillion worth of stimulus in the US. Then economists said no one could have expected this inflation. What level of stimulus would they have expected inflation at? Are the stupid or liars? I am going with liars because no one is that stupid. 1 Million dollar stimi checks for everyone. Debt jubilee. Wild stuff.
Economists specialize in knowing who’s signing their paycheck, and for most of them, it’s the government. You expect them to say something the government doesn’t want to hear?
You knew we were in for this when Biden bragged that Milton Friedman wasn’t in charge anymore.
Very true. Economists are very good at explaining why politicians can spend like drunken sailors.
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