The consumer price index for November was up 7.1% year over year, the lowest it has been for several months. Economists voiced optimism that the worst of inflation may be over. This would mean the Federal Reserve will stop raising rates and the expense of loans like mortgages will begin to level and perhaps drop. The best way to evaluate inflation, however, is to look at the items people use frequently.
The price of eggs is 50% higher than a year ago, for example. And fuel oil costs are 65% higher. And with food prices so high, the price of school lunch – food at elementary and secondary schools – more than tripled, soaring more than any other household item.
Some economists are less sanguine about inflation. They point to the fact that inflation still remains higher than at any time since the 1980s, the last time prices spiked at levels similar to the current pace. They further argue that only higher unemployment can cool the surging costs of goods and services. Fewer people who can buy products and services means less demand pressure on them.
Larry Summers, a leading economist, says that unemployment will need to rise to above 6% for five years, or above 10% for one year, to bring inflation down to the Fed’s target of 2%. That means millions of people would lose jobs. It is a brutal price to pay to see if Summers is right. (These are the states where inflation is causing the most stress.)
One reason high prices for some goods and services will not go away is tight supply chains. Railroads and ships continue to post slow deliveries. CNN recently reported that even though the railroad industry dodged a strike by hundreds of thousands of workers, many business groups are “complaining about the poor service, including longer transit times and fewer trips by the railroads to pick up freight or return empty cars to the businesses they serve.”
If a recession is about to begin or has begun already, higher unemployment will be part of the downturn. At that point, the Fed may hit its inflation target, but, as the CPI shows, the prices of some items are, and will probably remain, extremely high. (Also see, 50 cities with huge populations living on food stamps.)
To determine the 40 household items that are soaring in price, 24/7 Wall St. reviewed the BLS’ Consumer Price Index Summary November report. Prices are compared to November 2021.
Click here to see how high the price of school lunch is soaring more than any other household item.
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