The U.S. Bureau of Labor Statistics reported Wednesday that the consumer price index (CPI) soared 6.2% in October compared with a year ago, the largest annual gain since November 1990. Core CPI, which excludes volatile food and energy prices, rose 4.6%, the highest since August 1991. The hotter-than-expected inflation data sent stock markets tumbling, with the Dow, S&P 500, and Nasdaq all closing sharply lower.
Inflation: 'The Predictable Outcome of Reckless Government Policies'
For the past 12 months, Federal Reserve officials and many media outlets have described inflation as 'transitory.' Wednesday's data dashed that narrative. The Fed has expanded the monetary supply at an unprecedented pace, suppressed the benchmark interest rate, and U.S. politicians have passed multi-trillion-dollar spending packages, all of which fueled the rapid price increases.
Former U.S. Representative Justin Amash wrote on Twitter: 'Inflation is a huge tax increase on Americans and the predictable outcome of reckless government policies: massive spending bills, trillions of dollars created out of thin air by the Federal Reserve, and labor and supply shortages exacerbated by misguided interventionist schemes.'
Whistleblower Edward Snowden also weighed in: 'Inflation hits 6.2%—wiping out the raises of those lucky enough to even have a good job—parents are worried about the price of milk for their kids (when the shelves aren’t empty).'
White House Prioritizes 'Getting Prices Down'
President Joe Biden acknowledged the pain felt by Americans during a speech at the Port of Baltimore on Wednesday. 'Everything from a gallon of gas to a loaf of bread costs more. And it’s worrisome, even though wages are going up,' Biden said. He emphasized that the administration is focused on 'getting prices down' and 'making sure our stores are fully stocked.'
Biden pointed to his recently passed bipartisan infrastructure bill, which he will sign on Monday. The bill includes $17 billion for port modernization to reduce supply chain bottlenecks. 'We’re going to modernize our ports ... We’re going to reduce congestion,' Biden told the audience. He also urged Congress to pass the Build Back Better Act, arguing it will ease inflationary pressures.
Despite the administration's efforts, many economists remain skeptical. Market expectations for a Federal Reserve rate hike in 2022 have risen sharply. Meanwhile, alternative views from the crypto community note that using pre-1980 methodology, consumer price inflation would be approximately 15%, according to analyst Tuur Demeester. The debate over whether inflation is truly transitory or here to stay continues to dominate financial headlines.