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Another Key Inflation Metric Hits New 40 Year High

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Joe Biden

Yet another key measurement of inflation has hit a new 40-year high, according to Commerce Department data released on Friday.

The Personal Consumption Expenditure (PCE) index rose by 6.6% for the year ending in March, according to the Bureau of Economic Analysis. The rate is the highest since the year ending in January 1982, a record which was last broken in February.

In March 2022 alone, prices rose by 0.9%. After adjusting for the increase in prices, disposable personal income (DPI) decreased 0.4 percent in March.

Earlier this month, a report from the U.S. Bureau of Labor and Statistics on the Consumer Price Index (CPI), another measurement of inflation, similarly hit a new 40 year high.

According to the CPI report, inflation rose 1.2% in March 2022 alone, outpacing economists’ expectations and far exceeding the 0.8% increase in February 2022. For the year ending in March 2022, inflation hit 8.5% – higher than the already elevated Dow Jones estimate of 8.4%, according to CNBC.

As explained by CNBC, “The data reflected price rises not seen in the U.S. since the stagflation days of the late 1970s and early ’80s. March’s headline reading in fact was the highest since December 1981.”

CNBC also pointed out that the record high inflation rate has resulted in the real wages of Americans continuing to decrease.

“Due to the surge in inflation, worker wages, despite rising 5.6% from a year ago, weren’t keeping pace with the cost of living,” CNBC reported. “Real average hourly earnings posted a seasonally adjusted 0.8% decline for the month, according to a separate Bureau of Labor Statistics report.”

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Economy

Report: April 2022 Inflation Was Worse Than Expected

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The inflation crisis continued to worsen in April, according to new data released by the Bureau of Labor Statistics on Wednesday.

“The consumer price index, a broad-based measure of prices for goods and services, increased 8.3% from a year ago, higher than the Dow Jones estimate for an 8.1% gain,” CNBC reported. “That represented a slight ease from March’s peak but was still close to the highest level since the summer of 1982.”

According to the new CPI report, inflation “increased 0.3 percent in April on a seasonally adjusted basis after rising 1.2 percent in March… The all items index increased 8.3 percent for the 12 months ending April, a smaller increase than the 8.5-percent figure for the period ending in March. The all items less food and energy index rose 6.2 percent over the last 12 months. The energy index rose 30.3 percent over the last year, and the food index increased 9.4 percent, the largest 12-month increase since the period ending April 1981.”

Due to the rising inflation rate, the real wages of American workers continued to fall over the last year. According to a separate report from the Bureau of Labor Statistics, the “Real average hourly earnings decreased 2.6 percent, seasonally adjusted, from April 2021 to April 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.4-percent decrease in real average weekly earnings over this period.”

As noted by CNBC, “Markets had been looking for signs that March’s 8.5% CPI reading would mark the peak in pandemic-era inflation.”

However, the new April report showed that “this is another upward inflation surprise and suggests that the deceleration is going to be painstakingly slow,” said Seema Shah, chief strategist at Principal Global Investors, according to CNBC.

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Economy

Gas Prices Hit All Time High Of $4.37 Per Gallon

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Gas Prices

Gas prices have surged to a new record high of $4.37 per gallon, surpassing a previous record set March 11, according to the American Automobile Association (AAA).

“With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline,” AAA spokesperson Andrew Gross said in a statement. “These prices are creeping closer to those record high levels of early March.”

As AAA explained in a new report, new data from the Energy Information Administration (EIA) shows that “total domestic gasoline stocks decreased by 2.2 million bbl to 228.6 million bbl last week. However, gasoline demand increased slightly from 8.74 million b/d to 8.86 million b/d. Increasing gas demand and rising oil prices have pushed pump prices higher. Pump prices will likely face upward pressure as oil prices remain above $105 per barrel.”

As gas prices reached record highs in March, Democrat President Joe Biden warned that they were going to continue to “go up,” but he said that he “can’t do much right now. Russia’s responsible [for the rising gas prices.]”

It should be noted that gas prices rose nearly 50% during Biden’s first year in office; rising from $2.42 per gallon in January 2021 to $3.41 per gallon in January 2022 – a month before Russia launched its invasion of Ukraine.

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