Inflation

Surging prices are steadily chipping away at Americans' buying power – as well as President Biden's approval rating.

The Labor Department reported Wednesday that consumer prices were 6.2% higher in October than a year ago. That's the sharpest increase since November of 1990.

Price increases were widespread, with energy, shelter, food and vehicles all costing more. Excluding volatile food and energy costs, prices were up 4.6%

Much of the upward pressure on prices is the result of a mismatch between booming demand and limited supply, as businesses struggle to find both parts and workers.

Many employers have increased pay in order to attract more workers. But growing paychecks have quickly been eroded by the rising cost of gas and groceries.

Economists may know (and even agree) that the current inflation is attributable to the pandemic and its aftermath: sluggish supply chains, reluctant workers, shortages and interrupted energy deliveries. We also know the government has mainlined trillions of dollars in buying power to consumers since the spring of 2020. Price hikes might be considered all but inevitable.

But one of the lessons from inflationary eras past is that voters are less interested in causal responsibility than in forcing a change. In other words, if you are in office now, you are holding the bag.

For the past several months, Americans have felt the pain of higher inflation as they spend more on items ranging from food to gasoline to used cars to housing. Many observers wonder whether the inflation is being caused by the Federal Reserve keeping interest rates low and buying up lots of government debt or by supply chain disruptions and other production bottlenecks caused by the COVID-19 pandemic. If it’s the former, then the Fed will need to tighten monetary policy to get inflation under control. If it’s the latter, though, the recent uptick in prices will dissipate on its o