Inflation Explained for the Layman
Here’s what you need to know about inflation numbers. (I promise, it’s not complicated, as long as you’re sober.)
The Consumer Price Index (CPI) is reported once each month by the U.S. Bureau of Labor Statistics. (The June numbers will be reported on July 13 at 8:30 am ET.)
The CPI report tells us how much prices of things that we commonly buy have risen, as a percentage of previous prices. (Simplistically, if a basket of food was $100 one year ago, and the same food today is $105, that’s a 5% increase.) They report month-over-month (MOM) numbers and year-over-year numbers (YOY).
Friday, the YOY number for May 2022 was 8.6%, meaning that an assortment of goods and services (including food and gas) cost us 8.6% more today than it did a year ago. “Experts” expected the number to be 8.3%. The previous recent high was the March number, up 8.5%. (For point of reference, the Federal Reserve’s targeted inflation rate is 2.0%. So today’s number is a disaster, and I’m not exaggerating.)
The May CPI number rose to a 40-year high. That’s not good.
If your most recent annual salary increase (or Social Security increase) was less than 8.6%, it means that you are spending more money for the same things that you bought last year, but your wages did not increase to match the increased expenses. For many people, it means that they have to cut back on spending (vacations, donuts, etc.) in order to continue buying necessities (food, underwear, etc.). That’s not good.
Much of this mess was PURPOSELY done to us. That’s not a political statement; it’s a FACT. For example, we were an energy-independent country until Joe Biden came into office. When he decided to stop various pipeline projects and make U.S. energy production more difficult and more expensive (via laws, rules and regs), it forced the U.S. to once-again begin relying on our overseas enemies for our energy needs. And of course, that put people out of work and raised the price of energy. Thus, your lovely gasoline prices. Do not, for one moment, think that our government didn’t know that gas prices would skyrocket.
There are other things that our government has done that very specifically harmed commerce and pricing, but those are stories for another day. I have to get back to work.