Key Inflation Gauge Sees Highest Jump Since 1990s, Rising 3.6%
Economic pundits were talking about possible inflation before we went into coronavirus pandemic lockdown and then they started talking about it again when most restrictions were lifted. Talk is cheap — unless it comes in the form of a release from the U.S. Commerce Department’s Bureau of Economic Analysis reporting that the consumer consumption expenditures price index was up 3.6% in July 2021 versus July 2020. This is the greatest increase since May of 1991, according to CNBC.
The 3.6% increase did not include energy or food prices. These tend to be more volatile and can mask trends in prices elsewhere in the economy. However, a broader measure that includes these two items showed an annual increase of 4.2% for July, the largest since January of 1991.
Personal income was also up in July, but not by as much as prices. It only increased by 1.1% in July.
Income is likely to increase further as the labor market tightens and employers are forced to compete for workers. This in turn will probably to drive up prices elsewhere in the economy as employers try to offset increased labor and other costs. In other words, expect higher inflation numbers and a greater increase in personal income when August numbers come out.
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Although these price increases are greater than Americans are used to, they hardly reach dangerous territory. According to Trading Economics, inflation in Venezuela is 2720%, so we have quite a ways to go before things get scary. In the meantime, it’s probably a good idea to ask for a raise.
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