It was soon after my first MegaCorp pension check arrived in the mailbox that the latest CPI report was released with the most price inflation we’ve seen in more than a decade.
My new pension payment is fixed – no cost of living adjustment – so I immediately had visions of it being quickly consumed by this monetary beast that has been lying in wait since the 1980s.
Fed Commissioner Powell’s proactive appearance on 60 Minutes did little to calm my nerves. He curiously called the coming inflation “transitory”, which I think means temporary, without the benefit of ever going back down again.
I was concerned enough to look into the inflation by item to see what was happening and thought I would share it here …
There are a lot of big numbers in the 12-month annualized column on the far right. There is also no shortage of reasons for them to be way up.
Food prices could be up because of ‘away from home’ (restaurants) demand is returning after the pandemic. Energy prices (petroleum & natural gas) because of the pipeline hacking on the East Coast. And, car prices because of the world wide microchip shortage.
All of these seem temporary until I think about the other, long-term drivers, that could be at okay: the audaciously large stimulus checks people have received (debt-financed), rising state minimum wage laws, and increased regulation on automobiles & energy.
Unfortunately, I can think of as many reasons that these price spikes are likely permanent and will grow – as they would be “transitory”. I’m guessing the May report (due in about 3 weeks) won’t settle the questions – it will take a bit longer into summer before we see where we are headed.
What do you think “transitory” means in the context of these inflation numbers?
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