Based on a report released on Thursday by the Bureau of Labor Statistics, the Consumer Price Index (CPI) increased by 8.2% between September 2021 and September 2022.
This exceeded despite the Federal Reserve’s strict contractionary policy, therefore portending badly for Democratic opportunities in the midterm elections.
Analyst expectations were exceeded for the month-to-month growth of 0.4%, while core inflation, which excludes the more volatile energy and food categories, came in at 0.6% as opposed to 0.4%.
Despite several categories of energy costs declining, the headline number was affected by a 0.8% rise in food prices and a 0.7% increase in housing costs.
As trading got underway on Thursday morning, the Dow Jones Industrial Index dropped 1.7%, while the Nasdaq and the S&P 500 also had declines of 3% and 2.2%, respectively.
Inflation on an annual basis in September remained virtually constant from the rate of 8.3% recorded the month before. While the inflation rate slowed from July to June, due to lower energy costs, petrol prices have recently resumed their upward trend.
US stocks plunge after September inflation surpasses expectations to hit highest level since 1982 https://t.co/dkxgeBWWa1
— Markets Insider (@MktsInsider) October 13, 2022
In an effort to reduce rising inflationary pressures, Federal Reserve policymakers increased target interest rates by 0.75% last month, following two similar increases in June and July.
The steadily rising price levels could lead to additional action.
In order to boost the economy during the lockdown-caused recession, central bankers initially set a target interest rate that was close to zero and bought government assets.
In light of the shift to a contractionary monetary system, many prominent economists have attacked the central bank.
They are alleging that officials who were sluggish to act in response to increasing price levels over the previous two years are now causing unnecessary harm through their haste to combat inflation.
Biden Avoids Discussions
Lael Brainard, vice chair of the Federal Reserve, stated earlier this week that the central bank’s monetary policy “would be tight for some time to guarantee inflation comes back to target.”
Jerome Powell, the chair of the Federal Reserve, also stated the institution’s mission to ensure stable pricing levels must be revived.
Powell then said officials plan to reduce inflation to 2%, which has been mainly sustained by the central bank for the past three decades.
Inflation Surpasses Forecasts Ahead Of Midterm Elections In Bad Omen For Democrats https://t.co/kNAZwvjvgi
— Daily Wire News (@DailyWireNews) October 13, 2022
President Biden has frequently avoided discussing how his administration’s support of numerous spending bills contributed to price increases.
Voters gearing up to cast ballots in the upcoming elections are worried about the economy and rising prices, with 84% of them ranking the former as a top concern.
According to an ABC News and The Washington Post survey, Republicans have a 16% advantage over Democrats when it comes to trust in their ability to manage the economy, and a 19% advantage when it comes to inflation.
Prior to the midterm elections, “the inflation forecast is now virtually fixed,” Hamrick continued. The news isn’t great for Democrats holding Congress if looked at entirely, which is generally not the case.