Data released by the US Department of Labor on September 13 showed that the US consumer price index (CPI) increased by 0.6% month-on-month in August, a significant increase of 0.2% in the previous month; The year-on-year increase was 3.7%, significantly higher than the previous month's 3.2% and also higher than the forecast of 3.6%.
Since the consumer price index reflects the price level of actual consumer goods at the disposal of residents of a country or region, it is generally believed that a higher index indicates a higher inflation rate.
The CPI report is one of the last important economic data ahead of the Fed's new monetary policy meeting on September 19. The Fed is now expected to leave interest rates unchanged at its September meeting.
△ Screenshot of CNN report
Soaring energy prices are likely to push up inflation expectations
It is worth noting that energy prices rose by 5.6% month-on-month, of which gasoline prices rose 10.6% month-on-month, the largest monthly increase since June last year, and also the largest contributor to the month-on-month increase in CPI last month, contributing more than 50% of the increase.
△Screenshot of the Wall Street Journal website report
This is the second consecutive month of rebound in inflation after 12 consecutive months of decline, what does it say?
The NBC report quoted Wells Fargo senior economist Sarah House as saying that gasoline prices usually fall in August as consumers start driving less, but OPEC's cuts to oil production this year have led to a significant increase in gasoline prices.
△Screenshot of NBC website report
The United States provoked the Ukraine crisis and wooed Western allies to increase sanctions against Russia, which once led to a sharp rise in international oil prices. It is precisely because of this that the United States has fallen into a vortex of high inflation that has not been encountered in decades.
The United States has continuously raised interest rates in response to inflation, pushing up the risk of recession in itself and even the world, and soon causing oil prices to fall due to sluggish demand.
The fall in oil prices has undoubtedly damaged the interests of oil producers such as Saudi Arabia. In the eyes of the United States, the lower the oil price, the better it is for itself. First, it can help Western countries caught in the energy crisis get out of trouble, and second, it can maintain the "effectiveness" of its sanctions against Russia.
It's just that this wishful thinking has never started.
In order to curb the decline in international oil prices, Saudi Arabia and other major oil producers not only resolutely resisted the pressure of the United States and refused to increase production, but also the Organization of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia and the non-OPEC oil producers led by Russia (collectively referred to as "OPEC+") reached an agreement in June this year to further reduce crude oil production.
△ Screenshot of CNN report
Last week, Saudi Arabia and Russia each announced a three-month extension of oil production cuts until the end of the year, after the market had expected the cuts to be extended only into October. The latest decision has investors worried about energy shortages during peak energy demand in winter.
△Screenshot of Reuters report
As a result, the price of West Texas Intermediate (WTI) crude oil futures in the United States rose to its highest level since November 11 last year on September 12. Fed officials worry that a spike in energy prices could push up inflation expectations, which are seen as key to the inflation outlook.
What worries economists is that although energy does not account for the largest share of a series of CPI indicators, oil prices will not only affect commodity prices, but also extend to the prices of other services, which will force companies to raise prices, thereby exacerbating inflation risks.
△ The Wall Street Journal website reported: Rising energy costs will affect the prices of non-energy goods and services. Until recently, transport services helped drive core inflation back when it had been falling, but this could put core inflation at risk if energy prices continue to rise. Airline fares rose 4.9 percent last month after falling sharply earlier in the summer.
"Inflation in the lives of ordinary people, the government does not want to emphasize"
The analysis believes that in the coming months, several factors may put upward pressure on prices, in addition to rising oil prices, wage pressure is also increasing with the wave of strikes.
In the early morning of September 15, local time, the United Auto Workers of America (UAW) announced that due to the failure of collective bargaining negotiations, from the early morning of the same day, the General Motors plant in Ventsville, Missouri, the Stellantis plant in Toledo, Ohio and the Ford plant in Wayne, Michigan took the lead in launching the first round of strikes, involving nearly 13,000 workers.
△Screenshot of the US Consumer News and Business Channel website report
It was previously assessed that the strike would cause economic losses of up to $5 billion.
△ Screenshot of Forbes magazine report
U.S. media reported that not only will the UAW strike push up prices for car dealerships, but also recently concluded labor contracts in the aviation and medical industries will also raise the wages of some employees, which is contrary to the hopes of the Federal Reserve, which is seeking to slow wage growth to help ease inflationary pressures.
△Screenshot of the Wall Street Journal website report
In response to the high inflation caused by itself, the Fed has raised interest rates continuously for 18 months since March last year, and the latest rate hike in July this year has raised the benchmark interest rate to a range of 5.25% to 5.5%, the highest level in 22 years.
The analysis believes that if the inflation rate does not decline significantly, there may be more interest rate hikes in the near future. This will push up borrowing costs and further weaken the economy. In the end, the unlucky ones will always be ordinary Americans living on wages.
△Screenshot of NBC website report
Some Americans said they felt "pushed into a dilemma."
Michael Davidson, a recent college graduate, said he sees headlines every day about cooling inflation and a solid job market, but gasoline and grocery prices still make him anxious. He now gets about $50 more groceries bill every few weeks than he did last year.
A recent opinion piece pointed out that Americans are uneasy about things that don't always appear in the headlines or statistics but are obvious, such as the rising prices of eggs, bread, gasoline and other necessities. However, "none of these price increases are factored into what economists call the core inflation rate, which ordinary people experience in their daily lives and is not something the government wants to emphasize."
△Screenshot of the New York Times website report