Inflation in August 'Higher Than Expected' Even With Sharp Drop in Gas Prices

PJ Media ^ | 09/13/2022 | Rick Moran

[SeekAndFind]

Joe Biden and the Democrats had been riding “almost not catastrophic” economic news for much of the summer, pointing to a drop in gasoline prices as “proof” that Biden’s policies were “working.”

Gas prices are down — for the moment. Treasury Secretary Janet Yellen believes prices at the pump will start going up again this winter.

But even falling gas prices couldn’t bring down the overall rate of inflation that came in “higher than expected” at 8.3%. Prices have climbed 0.1% since July, and the Federal Reserve is now expected to raise interest rates other three-quarters of a percentage point at its meeting later this month.

Fox Business:

Those figures were both higher than the 8.1% headline figure and 0.1% monthly decline forecast by Refinitiv economists, likely a worrisome sign for the Federal Reserve as it seeks to cool price gains and tame consumer demand. Stock futures tanked on the surprisingly hot report, with the Dow Jones Industrial Average down more than 400 points on fears of an increasingly aggressive Fed.

So-called core prices, which strip out the more volatile measurements of food and energy, climbed 6.3% from the previous year, above the 6.1% forecast from economists. Core prices also rose more than expected on a monthly basis, jumping 0.6% in August – a bigger increase than in April, May, June and July, and a troubling sign that underlying inflationary pressures in the economy remain strong.

Biden had better pray that Fed Chairman Jerome Powell doesn’t lose his nerve and start raising rates before inflation is completely wrung out of the economy. The rising rates will almost certainly exacerbate the recession we’re already experiencing, but easing up on rates could easily lead to a double-dip recession where we fall back into one

[no-s]

> gas prices have dropped from above $4 a gallon to my being able to fill my car for just $3.55 today.
The question is why do we not yet see a corresponding drop in inflation?

The price of diesel is a better proxy for retail inflation, because shipping is mostly based on diesel, and the more steps in the logistics chain the more influence of diesel cost on cost of goods. There is a lag for price drops because inventory was bought at a higher price and thus higher cost is built in to existing stock.

This is not the only reason...