5 key takeaways from the 7.7% October inflation report

The U.S. annual inflation report came in at an astounding 7.7 percent.

America’s consumer price index (CPI) has not been this low since January. It was also the first time that inflation was below eight percent since February.

But while everyone is doing victory laps because the Federal Reserve might pull the trigger on a 50-basis-point rate hike instead of a 75-basis-point increase, it was not all good in October.

Here are five takeaways:

1. Real Wage Growth

Real wages (inflation-adjusted) have fallen for 19 consecutive months. From the Bureau of Labor Statistics (BLS):

“Real average hourly earnings for all employees decreased 0.1 percent from September to October,
seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an
increase of 0.4 percent in average hourly earnings combined with an increase of 0.4 percent in the
Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.1 percent over the month due to the change in real average
hourly earnings combined with no change in the average workweek.

Real average hourly earnings decreased 2.8 percent, seasonally adjusted, from October 2021 to October
2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the
average workweek resulted in a 3.7-percent decrease in real average weekly earnings over this period.”

2. Record High Shelter Costs

While shelter is a lagging inflation indicator, it surged at an annualized rate of 6.9 percent. Even on a month-over-month basis, shelter jumped 0.8 percent.

3. Food Prices Are Still Soaring

The food index advanced 10.9 percent year-over-year in October. Grocery store prices climbed 10.9 percent, while food away from home jumped close to nine percent.

But the index highlighted that food prices are a lot higher than they were a year ago. Even a monthly basis, many food items are rising.

Here were some of the more notable year-over-year gainers:

• Eggs: 43 percent
• Flour: 24.6 percent
• Lettuce: 17.7 percent
• Potatoes: 15.2 percent
• Milk: 14.5 percent
• Bread: 14.8 percent
• Coffee: 15.6 percent

The meat index is still up eight percent from last year. Plus, meat prices rose 0.6 percent from September to October.

4. Energy is Ticking up Again

While it is no secret that energy prices are way up from last year, the key development is that the index is climbing again on a monthly basis (1.8 percent).

In addition, fuel oil and other fuels surged 10.5 percent, fuel oil jumped 19.8 percent, motor fuel swelled four percent, and gasoline increased four percent.

Electricity costs were about flat for the month, but they were still up more than 14 percent year-over-year.

5. Celebration

It is a sad state of affairs when the U.S. economy is maintaining an inflation rate north of seven percent and everyone is celebrating. This is what happens when the Federal Reserve distorts the economy and financial markets for the last 25 years. The junkies are ebullient that they might get their next fix soon!