Inflation continues to pinch Americans’ wallets and poses a political dilemma for President Joe Biden, with consumers feeling the pain, especially in the cost of food bought in supermarkets and grocery stores.
While America’s overall annual inflation rate came in at 8.3 percent in August, according to Sept. 13 data from the Bureau of Labor Statistics (BLS), prices in the “food at home” category soared at the fastest pace in 43 years.
The cost of food purchased for consumption at home jumped by an annual 13.5 percent in August, the highest figure in this expenditure category since March 1979.
“Unpleasant surprises aplenty are found in the August Consumer Price Index” or CPI, Bankrate Senior Economic Analyst Mark Hamrick told The Epoch Times in an emailed statement, commenting on the BLS inflation data.
While grocery store inflation came in especially hot, the overall food category which includes food purchased in restaurants (which advanced by 8.0 percent year over year), was also the highest in over four decades.
“The prices for necessities continue to fuel this fire, including shelter, food, and medical care,” Hamrick said. “The report notes that the food index has jumped 11.4 percent over the past year, marking the biggest 12-month increase since May 1979.”
Bread prices rose 16.2 percent from the same time a year ago, milk soared 17 percent, fruits and vegetables jumped 9.4 percent, and eggs spiked 39.8 percent.
The BLS inflation data also showed that meat was mostly up across the board, with uncooked ground beef up 7.8 percent, pork rising 6.8 percent, ham climbing 9.2 percent, and chicken surging 16.6 percent.
Inflation Sends Stocks Tumbling
Wall Street’s main stock indexes plunged on Sept. 13 after the inflation print came in hotter than markets expected, with the price data suggesting the Federal Reserve will remain on a hawkish tilt and keep tightening monetary settings aggressively.
The Dow Jones Industrial Average lost 1,276 points, or 3.94 percent on Tuesday, its worst day since June 2020. The Nasdaq composite dropped 632 points, or 5.16 percent and the benchmark S&P 500 Index fell 177 points, or 4.32 percent.
ING analysts said in a note that the hotter-than-expected inflation numbers dash any hopes that the Fed might deliver a smaller rate hike, of 50 basis points (bps), instead of an expected 75 bps, at its upcoming policy meeting on Sept. 20–21.
“Clearly this outcome throws out any talk of the Fed potentially surprising with a 50 basis-point hike next week, but it isn’t calamitous enough to see a big push for 100 basis points,” ING analysts said, adding that they’re standing by their earlier predictions for a 75 basis-point hike.
Fed funds futures contracts, which reflect market expectations for the benchmark interest rate, currently put the odds of a 75 basis-point hike at 70 percent. The chances of an even bigger 100 basis-point hike stand at 30 percent.