Gas, food and transportation network shortages all helped drive up consumer prices
AILSA CHANG, HOST:
Prices are rising higher and staying high longer than many forecasters had expected. The Labor Department said this morning that consumer prices in September were 5.4% higher than a year ago. Gasoline and groceries were among the big drivers of the price increase. An overloaded transportation network is also pushing up prices and leading to longer wait times for consumers. And in a moment, we'll hear from a truck driving instructor who's trying to address that cargo traffic jam.
But first, we are joined now by NPR's Scott Horsley. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good afternoon.
CHANG: Good afternoon. OK, so inflation in September - it matched the highest level in 13 years, and I want you to name some names now. Where are the highest prices we're seeing?
HORSLEY: Well, you already named two of them - gas and groceries. Gas prices are up 42% from a year ago - groceries up about 4.5% percent. New cars are also expensive, if you can find one. We've talked before about the semiconductor shortage that is limiting new car production. And so automakers are using the chips they do have mostly for pricey and profitable models. The average price of a new car in September was almost 9% higher than a year ago.
Now, some prices did go down last month, like airfares, but that's likely because of the late summer surge in coronavirus cases that depressed demand for travel. Now that COVID cases are falling, look for airfares to start climbing again. Used car prices also went down a bit last month. But judging by the wholesale market, that was also just a temporary reprieve.
CHANG: The thing is, both the Biden administration and the chairman of the Federal Reserve have been saying for months now that higher inflation is probably just temporary, right? So prices keep climbing. Has either the White House or the Fed acknowledged this reality?
HORSLEY: Yeah, the Treasury secretary and the Fed chairman still see inflation as primarily driven by the pandemic, and they think prices will start to level off once that's behind us. Of course, the pandemic itself has dragged on and so have those supply chain tie-ups you mentioned. We did get a different message this week from Raphael Bostic, who heads the Federal Reserve Bank in Atlanta. He says he and his staff have sworn off that kind of language.
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RAPHAEL BOSTIC: It is becoming increasingly clear that the feature of this episode that has animated price pressures - mainly the intense and widespread supply chain disruptions - will not be brief.
HORSLEY: In a speech yesterday, Bostic joked that anyone on his staff who calls inflation transitory has to put a dollar in a jar.
HORSLEY: And I guess if inflation continues, that'll go up to a dollar five next year.
HORSLEY: One thing that worries Bostic is the longer these supply chain bottlenecks linger, the more businesses and consumers start to adjust their expectations and their behavior. And already, he says, a lot of businesses are shifting from ordering goods just in time to ordering more just in case. And while that may provide some added resiliency, it's also likely to lead to higher prices.
CHANG: Exactly. I mean, what about people who are on a fixed income? What do these higher prices mean for them?
HORSLEY: It's challenging, for sure. There is some good news today from Social Security. The administration announced that beneficiaries will get a cost-of-living adjustment next year of 5.9%. That's the biggest Social Security raise in 39 years - just another sign of how unusual this level of inflation is. That should make it easier for seniors and others who rely on Social Security to pay their bills. But it's also a potential drain on the Social Security system. And the Committee for a Responsible Federal Budget estimates that it means the Social Security Trust Fund will be depleted a year earlier than expected - 11 years from now instead of 12.
CHANG: Well, I also understand that the Biden administration announced some new efforts today to ease at least one reason for these rising costs - that is the cargo traffic jam. Can you talk about those efforts?
HORSLEY: Yes, the administration helped broker a deal where the Port of Los Angeles, which is the busiest in the country, is going to stay open all night and on weekends. And the president says that 24/7 schedules should put a dent in the backlog of containers that's been piling up on the West Coast.
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PRESIDENT JOE BIDEN: That means an increase in the hours for workers to be moving cargo off ships, onto trucks and rail cars to get to their destination. And more than that, the night hours are critical for increasing the movement of goods because highways are less crowded in the evening - at night.
HORSLEY: Of course, getting the goods out of the port's only the first step to really relieve this backlog. You're also going to have to make progress with railroads and truckers who carry those containers to wherever they might be going in the country.
CHANG: That is NPR's Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome.
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