The CPI has picked up much faster than many expected as the economy reopened. The bottlenecks at meat and poultry processing plants and jump in dairy prices in response to COVID were substantial and couldn’t come at a worse time for people losing supplements to their UI benefits
A 5.6% monthly jump in used car prices accounted for about 40% of the monthly gain in the overall CPI, but gains were broad based. What was striking were the details which revealed major break in spending patterns between wealthy work from home households and the rest of the pop
Those who can are spending more on their homes, yards, exercise equipment and music streaming subscriptions. Costs of waste management have also picked up with so many at eating at home and ordering online.
Conversely, rents and shelter costs for schooling are falling. Evictions are up, while more young adults are living at home w parents as they traverse on line options for higher education.
Medical costs slowed after surging earlier in the Summer. The higher costs of PPE and need to socially distance patients fueled year over year increases. Many offices and hospitals have complained that they are having a hard time getting parents back to work.
The Federal Reserve is betting that much of the recent uptick in inflation is transitory, especially now that the unemployed are getting much less than they were to cover costs. The biggest risk are supply shocks, which are complicate the outlook.
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