The authors report that in the next several months you can expect measured inflation to increase somewhat, primarily due to three different temporary factors: base effects, supply chain disruptions, and pent-up demand, especially for services.
Now keep in mind this is a White House memo — and I am sharing with you the warning that we may see this as a Black Swan event.
The monthly consumer price index, released Tuesday morning by the Bureau of Labor Statistics, showed a 0.6 percent inflation increase in March, the largest one-month increase in nearly a decade. Over the past year, prices have increased by 2.6 percent overall.
Gas skyrocketed by 9.1 percent last month. Since February, prices of fruits and vegetables have risen by nearly 2 percent, and the index for meats, poultry, fish and eggs has risen by 0.4 percent, according to the government figures.
The spike comes on the back of prices that had already risen during last year’s pandemic stockpiling and supply chain disruptions and never went down. Consumers are noticing their inflating receipts.
Before the pandemic began, the national average for a pound of bacon in January 2020 was $4.72. By last month, the price had soared to $5.11, according to exclusive supermarket point of sale data from NielsenIQ. Ground beef is up to $5.26 a pound, from $5.02. Bread is up to $2.66 a loaf, from $2.44.
The hikes are more acute in certain areas. Boston and Philadelphia are paying nearly a dollar more per pound of bacon, while in Chicago it is up by about 70 cents. Several items spiked by over 5 percent at once in Dallas, including eggs, chicken breast, fresh ground beef and sandwich bread.
Changes at the checkout are also pressuring grocery profit margins. Manufacturers have cut back on promotions and coupons to moderate demand since the stock-up period in March last year.
Economists say costs from rising gas prices, a spike in commodity prices, increased imports by China, heavy Midwest crop damage and other factors are all getting passed on to retail consumers.
Gas prices and transportation costs that get passed on to consumers, especially for items like bread, are only going up as driving increases faster than oil production. So grocery prices are likely to remain on the higher end of estimates for at least the rest of the year.