US Inflation Rate Hits New 40-Year High of 7.9% – inflation accelerated for shelter (4.7% vs 4.4%); food (7.9% vs 7%, the largest since July of 1981), namely food at home (8.6% vs 7.4%); new vehicles (12.4% vs 12.2%); and used cars and trucks (41.2% vs 40.5%).
Inflation acts as a hidden tax on the middle and lower classes. The government will automatically get more tax revenues as the prices of goods and services rise. So, inflation is a positive for the government despite its negative impact on its citizens. Cleveland County citizens passed a 1/8 cent sales tax for public safety in 2020. Sales tax collections are up 15% for the 2021/2022 fiscal year compared to 2020/2021.
The primary driver of the current inflation comes through money printing by the Federal Reserve. The Federal Reserve nearly doubled its bond purchases since the beginning of the pandemic, pumping almost $4 trillion into the economy.
The second means of inflation comes through massive government spending. With the several “emergency” measures hastily passed under the guise of pandemic relief and President Biden’s massive new spending plans, America is looking at the potential for 1970s economic stagflation.