Householders feel the pinch as price rises exceed forecasts, pressure Fed
With data on Thursday showing that US inflation in September rose faster than expected, teacher Sally Horton regrets she didn't act to change the windows at her Houston house to double panes before the pandemic struck.
"I did a quote in 2019 but thought I should wait a bit to save more for the major investment. Then COVID-19 happened. Now the new quote is about 40 percent higher. I wish I didn't hesitate then," Horton told China Daily.
Horton is seeing prices jump on almost everything in the Texas city she calls home. "My impression is that, compared to pre-pandemic, some food prices have gone up by 40 to 50 percent from grocery stores to restaurants," she said. "We have to reduce the frequency of dining out to deal with the high inflation."
Horton also said her family is poorer now because the small increase in their income is far outpaced by the rise in living costs. She isn't sure how long she will have to wait before she can change the windows.
Her experience is reflected in the inflation data released on Thursday. It shows that consumer prices have climbed more than expected and reached 8.2 percent this year through September.
Excluding volatile food and gas prices, the core inflation rate rose 6.6 percent, up from 6.3 percent in August. This represents the biggest jump since August 1982, a fresh 40-year high.
The data showed that core services prices rose at a one-month annualized rate of 9.9 percent, the highest increase since 1982. Prices for motor vehicle repair services rose 2.2 percent from August. Dental care also posted big price increases.
Services prices, reflecting labor costs, are also rising. Data showed that average hourly wages in the three months through July and August were 6.7 percent higher than a year ago.
Julia Jenkins, a mother of two in Houston, told China Daily that she is now paying $70 per hour for her daughter's art tutor, an increase of $20 from before the pandemic. Her lawn service company has also raised prices, by 17 percent.
"We are starting to see persistent inflation creeping into the economy," Steve Rick, chief economist at CUNA Mutual Group, told The New York Times. "We are really concerned about this turning into a wage price spiral, with wages rising and making it hard to get inflation down anytime soon."
While the price of gas has come down over the summer, food prices continue to rise at a high rate. The data shows that on an annual basis, the food index rose 11.2 percent. On a monthly basis, the price of potatoes rose 3.5 percent, apples gained 5 percent and lettuce increased by 6.8 percent. Prices for milk and eggs, which had risen sharply earlier this year, dropped slightly.
Higher food prices are driven by many factors including more expensive gasoline, rising wages and prices of packaging and fertilizers.
The Russia-Ukraine conflict has also disrupted exports of wheat, sunflower oil and other agricultural products that pushed food prices up.
Many expect the inflation data is likely to keep the Federal Reserve on track to increase interest rates by 0.75 percentage point at its meeting in November. The central bank has already raised rates by that amount in its past three meetings.
While prices soar, data shows that jobless claims have gone up. The Labor Department said on Thursday that in the week ending Oct 8, seasonally adjusted unemployment claims came to 228,000, an increase of 9,000 from the previous week.
The four-week moving average of unemployment claims was 211,500, a rise of 5,000 from the previous week's average.
Another government report in October showed that the number of available jobs in the US dropped in August compared with July.