New Consumer Price Index numbers have been released and they are alarming. Prices are now rising faster than what we were told to expect. In April, prices were up 4.2% from 1 year ago verses the 3.6% that they were expecting. This is the sharpest increase in prices in 12 years. The gain from March to April was 0.8%, 4 times the 0.2% that was expected. The month to month gain is the sharpest increase since 1981.
We are now being told that this is only going to be “transitory” inflation and then things will return back to normal. But even the experts are shocked at how quickly inflation is rising. According to Michael Pearce, Senior U.S. Economist at Capitol Economics “It’s just that there’s a lot more ‘transitory’ than they were expecting.”
The official numbers are alarming but they don’t tell anywhere close to the full story. Inflation is already far worse than what the official numbers are and if you have bought anything in the past year that is probably obvious to you.
Back in the 1980’s and then again in the 1990’s, the way that inflation is measured was changed. Currently we are being told that inflation has risen by 4.2% in the past 12 months. But if we were still measuring inflation the same way that it use to be measured, that number would be around 8%.
To put that 8% in perspective, the Federal Reserve usually has a 2% yearly targeted inflation rate, so inflation is now rising 4 times as much as what it should be.
We are being told that inflation is no where near as bad as it was under Jimmy Carter in the 1970’s. But that’s not exactly true either. At the worse point of the 1970s, inflation hit 14-15%. But if we calculated inflation the same way we did in the 1970’s, inflation would be over 11% and we are only at the beginning.
The only way to get inflation under control is higher interest rates. But for some reason, the Federal Reserve is saying that they are not going to raise interest rates until we have a steady inflation rate of about 2%. What? Does this make sense to anyone? The official rate is now double what the Federal Reserve would like to see and yet they are still not planning to raise interest rates anytime soon?
We are headed for really challenging times in the near future. You are going to see inflation continue to skyrocket and you need to do whatever you can right now to get your finances under control and prepare for what’s coming, and that is a significant rise in inflation, likely hyperinflation, and then the largest economic collapse since the Great Depression.
For more stories on what’s coming with our economy, check out: