Inflation – it will get worse before it gets better, it won’t get better soon

The Bureau of Labor Statistics released the latest Consumer Price Index this morning.  It is bad.  Karl Denninger of the Market Ticker spells it out:

The 900lb Gorilla in the room is the food index, which was up 0.9% on the month, and 1% for food at home.  Much worse, all items less food and energy was up 0.6% which was double the same index for last month.  This is the much-watched “core” inflation number and it is smoking hot, as I expected to both occur and continue since while everyone loves to claim fuel is “transitory” it matters not what you think since everything moves by truck for the last miles, and often for all the miles.  Stick diesel north of $5, in some places materially so, and the price of literally everything rises.

A lot.

Food is up 9.4% for the last 12 months, a figure last eclipsed in April 1981.  We all know what was going on then, right?


50 bips increases?  We should have an emergency 100bips right now, but you know they won’t.  And just like it took a year for Trump’s Congressional crazy from the pandemic “credit shower” to show up in wild price acceleration it will take 12-18 months for it to stop if and when Congress does stop it, and that is after The Fed stomps it.

Which they have to, because at this rate of acceleration people starve in relatively short order.

Again, to remind you — you can’t give away more welfare of whatever form to “help” because the sequestration mechanism of the last 30 years, which is international trade where the clearing is in dollars, has been permanently shut down by the Russian sanctions related to the Ukraine war.  This is not reversible in the short term and, in all probability, will never be restored at all, with the most-likely outcome over the intermediate term that sanity comes back (that is, international trade clears in the currency of the producing entity) since that is the one the producer ultimately needs to spend for the next order to be produced.

Looking through the table all manner of things completely unrelated to food and energy, and unrelated to Russia/Ukraine, so everyone thinks, are up double-digits.  Floor coverings, curtains, furniture, major appliances, clocks, tools and hardware, outdoor equipment (e.g. lawn mowers and weed whackers), tires, vehicle parts, oil, coolant and other vehicle fluids and even stationary.  Want to take a trip?  Lodging (e.g. motels, hotels and similar) is up 22.6% over the last 12 months.  Maybe a six-pack on the back porch will do instead.

Oh, and lest you think insurance is not in the game, health insurance is up 10% too.  Gee, I wonder why.

The other Gorilla in the room, fuel oil aka diesel fuel, is up 80% from last year.  Until and unless that is stopped and the price comes back down, which will only happen if and when the government ceases its war on fossil fuels, there is no way for the general upward pressure on prices to be reversed.  Every piece of farm equipment forward to the delivery of the food to your store runs on diesel.  Every single item you buy travels at least the last part of its journey moved by diesel.  I do not care how you “feel” about the issues related to the use of fossil fuels, the simple reality is that without them you have no fertilizer, no food and nothing in the store so all of the claims of virtue you issue will make you broke or even cause you to starve.

Could our political class do worse, I wonder, than they do were they our enemies and not our representatives elected to form a more perfect Union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity?

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