Breitbart Business Digest: Why Lower Gas Prices Don’t Mean Lower Food Prices – By John Carney (Breitbart) / Sept 9, 2022
Next week the Consumer Price Index (CPI) is likely to print its first negative month-to-month reading since May of 2020.
The Department of Labor said a month ago that CPI was “unchanged” in June, meaning the weighted index of prices paid by U.S. households had not risen from the May reading. This caused a good deal of confusion across the political spectrum. On the one hand, some conservatives understood this to mean that inflation had maintained the May pace when in fact it had fallen. On the other hand, some on the left said this meant that there was no inflation in the month. In fact, there was plenty of inflation—especially in food prices—but this was overwhelmed by the fall in gasoline prices.
Gas prices have now fallen for 13 consecutive weeks—88 consecutive days—and were falling throughout August. From August 1 through September 1, gasoline prices fell 10.6 percent, according to data from the U.S. Energy Information Administration. That’s a slightly slower pace than the July decline; but, with gasoline accounts for just about six percent of the CPI, that’s probably enough to guarantee a decline in the CPI.
Wall Street expects headline inflation to come down by 0.1 percent. Similar to last month, however, that headline decline will conceal a gain in underlying inflation. Core inflation, which excludes energy and food, is expected to rise 0.3 percent, matching the July figure. It’s very likely that food inflation will remain extremely elevated, bringing our measure of underlying inflation—core inflation plus food price, or foodcore—up even more. The Cleveland Fed’s measures of underlying inflation are likely to come in near last month’s reading of a 0.5 percent rise for median inflation and 0.4 for “16% trimmed mean” inflation.
