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The road to tame inflation continues to be a bumpy one. The media tells us inflation is slowing down. “Inflation has slowed steadily from its four-decade peak last June,” according to CNN Business. PBS says, “U.S. Inflation Is On The Downhill.”

Federal Reserve Chairman Jerome Powell is not as optimistic: “Although inflation has moved down from its peak – a welcome development – it remains too high. We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

The annual inflation rate was 3.7% ending in September, according to the Bureau of Labor Statistics (BLS) but they always revise it up a few days later – so you can expect a higher rate.

The big question is – if inflation is slowing down, then why are prices still sky-high?  Because, contrary to Isaac Newton, what goes up, doesn’t always go down. There are many reasons for this.

Food

Food producers and major corporations are reaping the rewards of higher prices while blaming “inflation.” Major food companies have reported huge profits in recent quarters. Nestlé, the world’s largest food company, increased profits last year by almost 3% to $46 billion.

Cargill reported a 23% jump in revenue last year to $165 billion – $6.68 billion was profit. They are taking advantage of the inflation narrative to raise prices and increase their bottom line. Now that they see that consumers are willing to pay more, they are in no hurry to lower prices.

Cars

Have you tried to buy a car or truck recently? You have to pay MSRP or higher, that is if you can even find one. Supply chain issues continue and inventory shortages persist. But there are no discounts or incentives anymore, only lower interest rates – and you need a FICO score way above 700 to get it. Ford’s profit will be between $11 – $12 billion this year, in spite of losing money on electric vehicles.

The ongoing UAW strike will make it harder to buy the car or truck you want. Inventory will become even scarcer and it will continue to be a seller’s market. The days of the buyer being in the driver’s seat are over.

Energy

Though “progress” on inflation has been made, gas prices have lurched higher again, reaching a national average of $3.88 a gallon as of Tuesday, October 10. Oil prices have surged more than 12% in just the past month.

Because of the Biden Administration’s insistence on advancing the Green New Deal and importing oil, not producing it, we have become dependent on volatile foreign markets, like the war in Ukraine and the escalating fight between Israel and Hamas.

Health

Although healthcare has been a source of inflation relief over the last year, it will not last, according to news website Axios. In fact, health care could be the next driver of inflation. The BLS will update its methodology for calculating health insurance starting in October. Economists expect that will mean health insurance goes from falling 4% per month to rising 1% a month.

Americans now spend over $13,000 a year on healthcare. High insurance premiums and deductibles are just some of the costs that come with maintaining your health, and those costs are going to get higher.

Homes

The median home sales price in the United States is $416,100 as of the second quarter of 2023. That’s down 3% from the first quarter of 2023 when the median home sales price was $429,000. But it’s still sticker shock.

Construction costs and labor remain high. The main factor behind soaring mortgage rates is Inflation, the size of the national debt, government spending, and other poor fiscal policy decisions that have contributed to upward pressure on mortgage rates.

Corporate Greed

The corporations have gotten away with price gouging, consumers have gotten used to higher prices and now those high prices are the “new normal”. High inflation is now accompanied by record-breaking profits for corporations. Are some of these companies intentionally driving inflation?

Government Spending

As long as President Biden continues his endless government spending policies, inflation is not likely to return to previously normal levels without economic repercussions.

“We must continue to remember that it is not only monetary policy that determines inflation,” says Michael Faulkender, chief economist for the Center for American Prosperity. “It is also fiscal and regulatory policy. The problem is that the Biden Administration keeps pouring gasoline on the inflation fire by running $2 trillion deficits while imposing costly regulations that take supply offline.”

There is a lot more work to do in the fight to curb inflation. But as long as corporations keep exploiting the problem and the government keeps up their relentless spending, inflation will keep rising, no matter what the media says or what the Federal Reserve tries to do.