Peach Tree Times

As inflation continues to cause the skyrocketing prices of common goods across the U.S., the Atlanta Fed Chair says it is not transitory.

During a recent speech at the Peterson Center for International Economics, Atlanta Federal Reserve Chair Raphael Bostic broke with Fed leadership's opinion on inflation and remarked that inflation will last longer than expected and should no longer be considered “transitory,” according to a release from the Federal Reserve Bank of Atlanta. 

Jerome Powell, the Fed’s chairman, has repeatedly asserted that inflation is transitory due to post-COVID-19 reopening of the economy and that the Fed has the tools to fight runaway inflation, but as inflation grows, with a 5.4% Consumer Price Index (CPI) increase in September, this assertion is growing harder to defend, according to Nasdaq. The September CPI increase the largest year-over-year increase since January 1991, according to CNBC News. 

“I believe the evidence is mounting that price pressures have broadened beyond the handful of items most directly connected to supply chain issues or the reopening of the services sector,” Bostic said. “If we scrutinize that report, we see that three-quarters of the CPI consumer market basket rose at rates higher than 3% during August.” 

Bostic concluded that this justifies adjusting the fed’s emergency monetary policy. Bostic is a voting member of the Federal Reserve’s monetary policy-setting Federal Open Market Committee, the body equipped to make such adjustments.

This staggering rise was driven mainly by significant jumps in fuel, food and housing prices. Since last year, the price of gas has increased by 42.1%, select grocery items by 10.5% and rent by 2.9%. During the same time period, wages grew by just 4.6%, meaning that on average, Americans’ purchasing power has dropped significantly. 

“The rise in shelter costs will exacerbate the negative financial impact so many households are feeling from higher prices,” Chief Bankrate Financial Analyst Greg McBride said on the increasing cost of housing. 

As winter approaches, remaining warm will be severely more costly this winter for Americans. Real Clear Politics reported that the prices of natural gas and propane have increased by 89% and nearly threefold, respectively. Before President Joe Biden took office, the United States was energy-independent, contributing to the low costs during the Donald Trump years. Compared to September's 5.4% year-over-year inflation rate, Trump left office maintaining a 1.6% average in his final six months.

Consumers can also expect supply shortages of key items during the coming months. CNBC News reports that consumer giants General Mills, Costco and Nike have warned that on top of supply shortages, prices will remain shockingly high for consumers. 

“We’ve seen cost-of-good increases especially in apparel, also costs of inbound shipping with the costs of containers, increases with transportation, trucking to get into distribution centers," Keith Jelinek, managing director of the global retail practice at consulting firm Berkeley Research Group, said. “There’s only so much you can pass on to the consumer.”

A recent study published in the Cato Journal by the Cato Institute concluded that reckless spending through increasing American debts contributes to inflation considerably and will cause numerous economic issues in the months and years to come if nothing is done about it.

Cabinet departments are trying to get rid of problems in the supply chain that limit the availability of goods for businesses and consumers, which have fueled inflation. CNN News reports that Commerce Secretary Gina Raimondo, part of Biden's Supply Chain Disruptions Task Force, acknowledged that administration efforts have been limited so far, but said, "On the margin, we've helped."

Biden recently announced a deal for the Port of Los Angeles to become a 24-hour, seven-days-a-week operation. The nighttime operations were arranged to help to break the logjam and reduce shipping delays on goods. Those logjams have been given partial blame for rising prices.

Biden’s Chief of Staff Ronald Klain recently was criticized for sharing a Tweet that called inflation a “high-class problem.” 

Republican National Committee Rapid Response Director Tommy Pigott replied, "Struggling to pay for food, fuel, and housing because of rising prices is not a ‘high-class problem. Biden is making everyone worse off, but instead of stopping the damage, their strategy is to try to gaslight Americans."