The May Consumer Price Index (CPI) inflation rate came in hotter than expected, and the ripple effects are spreading far and wide. But by focusing so much on the inflation rate, we’re missing the bigger picture.
The larger story is that all of this inflation is setting a new price level, guaranteeing a new high for prices in the economy for decades to come and further hurting the impoverished and working class.
The CPI increased at an alarming 8.6% rate in May over its level 12 months prior, a jump above April’s 8.3% rate increase and an indication that inflation is heating up again, not cooling down as many economists optimistically predicted.
We now know for sure that early statements from the Biden administration and the Federal Reserve about inflation being transitory were tragically misguided. The reality now is that inflation is becoming embedded in the economy as businesses and investors incorporate higher inflation into their strategies and workers are forced to make budgetary decisions and seek cost-of-living wage increases.