Inflation is now rooted in the necessities of life. Which means the Fed has little hope of lowering the cost of living without throwing millions out of work – By Rex Nutting (Marketwatch) / June 11, 2022
There’s no escaping the ravages of inflation. Far from “peaking” as some hoped, the consumer price index accelerated in May, rising at a 12.3% annual rate, the government reported Friday. Not only are the costs of necessities becoming more unaffordable, so are the costs of escaping by taking a vacation or by curling up on the couch with a video.
Inflation has become embedded in the economy and it’s affecting more of the goods and services, especially the items that we can’t do without: Shelter, food, clothing, transportation, and health care.
Persistence
As I wrote last month, the rising cost of renting or owning a primary residence is particularly worrisome. It’s the biggest item in the consumer-price index’s market basket. What’s more, the price of shelter is “sticky’—meaning once it goes up, it stays up.
It’s persistent, which is the opposite of “transitory.” That’s a big problem for American consumers, not to mention the headaches it creates for policy makers at the Federal Reserve who are assigned the job of bringing down inflation to tolerable levels.
