The latest economic figures released by the US Bureau of Labor Statistics confirm what everyone’s been feeling in their wallets—record high inflation.
Released earlier today, the consumer price index (CPI) came in at 9.1%. The CPI measures a carefully selected basket of goods and services—the official method for measuring inflation. This is the single largest increase since 1981.
Inflation refers to the average increase of products within an economy, which indicates the loss of purchasing power. For instance, if a gallon of milk cost $8 last year, rising to $8.80, this means that the cost has remained essentially the same—but the value of the dollar has dropped by 10%.
What Prices Increased the Most?
Inflation hit the energy and food sectors most sharply, with unleaded gas prices peaking at a national average of $5 per gallon.
Removing food and energy reduces the rate to 5.9%, confirming that these sectors have risen the most.
While gas prices sharply increased by nearly 50% from last year, the price at the pump has leveled off for the most part since early June, in part due to crude oil price leveling out, falling below their $126 mid-May peak to $96 as of July.
Nevertheless, price discovery for most of the economy remains on the high side.
“The concept of price discovery—determining the fair price of a particular good or service based on supply and demand—is a primary function of every public market, from ancient souks to auction houses.”
Everyone is uncertain how far inflation will go—especially since it’s approaching the mid-70s record highs, whether a small business or a transactional conglomerate. Prices will likely continue to rise as supply chains continue to crumble, supplies decrease due to global trade upset from Ukraine and Western-bloc sanctions, and gouging by oligopolies continues, per the norm.
Price Gouging and Collusion
In simple terms, big businesses pay market analysts to forecast costs and profit changes, advising higher prices even if the impact of inflation hasn’t hit their bottom line. As a result, this triggers inflation across the economy, as large portions of the technology sector are in cahoots with each other, called oligopolies.
**By Justin DesChamps