This has been the topic of concern for months. The FED seems to be only marginally worried having repeatedly stated that it is transitory. The bond market and other pundits appear to be separating themselves from that belief.
This morning October’s CPI (Consumer Price Index) was released, and the expectation was for an increase from .4% in September to .6%. The actual number came in at a .9% increase. The core CPI was up .2% in September and expected to rise to .4%, but instead rose to .6%. To be clear that is a 300% increase in inflation in one month.
Yesterday the PPI (Producer Price Index) was less dramatic coming in at an increase of .6% from .5% the month before.
We might be seeing a peak in inflation, but it may stay high into next year and that is going to do a lot of damage to consumers’ pocketbooks. The danger is wage inflation. We do not want to get into a cycle of wage and price inflation spiraling in tandem as it did in the late 1970s and early 1980s.