It’s still inflation, and it’s still growing. Wall Street Journal editors point out that
The 12-month inflation rate fell to 7.1% in November, which is down from 7.7% in October and is the fifth annual rate drop in a row since inflation peaked at 9.1% in June.
That decline, though, is against a higher rate of inflation that year ago—2021—than in 2020, the last year of the prior administration, which also was the last year of our economic burgeon.
In addition, greatly mitigating any beneficial effects of that reducing inflation rate, the prices generated by that inflation persist, and they will into the future. Those prices will be paid—into that same future—out of real wages that have shrunk by 3% year-on-year.
All of which suggests the Federal Open Market Committee (FOMC) has good reason to stick to its leaked intention to lift rates by another 50 basis points on Wednesday.
No. The Fed should have stuck to its 75 basis points (0.75%) benchmark interest rate increase pattern, instead of its meek .50% increase of last Wednesday. Kill this inflation spiral. Kill it dead. Dragging things out only runs up the costs for us average Americans who continue to pay those increasing prices with shrinking dollars.
Even those editors seem to agree:
The better policy is to break inflation now and return sooner to the Fed’s target of 2%. That’s a stronger foundation for growth and a rising standard of living for workers whose budgets have been savaged by inflation.
The Editors’ headline is spot on: Inflation Isn’t Vanquished Yet.
Far from it. And neither are its pocketbook effects.