As prices increase because of inflation, consumers are forced to pay more
A MARTÍNEZ, HOST:
Oil prices keep climbing, supply chains still tangled - and that's keeping inflation at its highest level in more than a dozen years. The Labor Department said this morning that consumer prices rose 5.4% during the 12 months ending in September. Price hikes accelerated in just the last month. NPR's Scott Horsley joins us. Scott, that is a long list of bummer items. Let's start with energy. Crude oil prices have risen sharply, and that's causing gas to rise. What's going on?
SCOTT HORSLEY, BYLINE: That's right. Oil prices have been on a tear lately. The U.S. benchmark topped $80 a barrel this week for the first time in nearly seven years. That price has more than doubled over the last year. And gas prices, which typically fall in the autumn as summer driving season winds down, are instead going up. Gas was one of the big drivers of inflation in September. Prices were up 1.2% from the month before and a whopping 42% from a year ago. And what's driving all this, A, is a strong rebound in demand for oil and production that's growing only modestly. You know, OPEC and the Russians are sticking with their plan to increase output only gradually. And domestic producers have also been pretty disciplined about not flooding the market.
MARTÍNEZ: Yeah, it's almost like you had a choice. You buy the gas, or you buy the car because cars are also getting expensive. So what's happening there?
HORSLEY: Yeah. New car production continues to be hampered by the shortage of semiconductors, so there aren't a lot of new cars to choose from. And the ones that are on dealers' lots are pretty expensive. Carmakers are using the chips they do have mostly for pricier, more profitable models. New car prices in September were up 8.7% from a year ago. As a result, more buyers have been turning to the used car market, and used car prices in September were up more than 24% from a year ago. Now, used car prices actually cooled off a little bit in the last couple of months, and we thought we might see a downward trend there. But now the wholesale price of used cars has started to climb, so we could see a further increase in October. Despite that, Treasury Secretary Janet Yellen told CBS News she still thinks this high inflation is a temporary problem.
(SOUNDBITE OF CBS NEWS BROADCAST)
JANET YELLEN: I believe it's transitory, but I don't mean to suggest that these pressures will disappear in the next month or two.
HORSLEY: Some compensation, A - this morning, the Social Security Administration announced that beneficiaries will get a cost of living adjustment next year of 5.9%. That's the biggest COLA in decades.
MARTÍNEZ: I know that semiconductors have been like a poster child for these supply problems, but they're not the only problem affected.
HORSLEY: No, we've seen really widespread supply chain disruptions for all sorts of reasons. Part of it is worker shortages at factories both in the U.S. and abroad. Part of it is transportation delays. We've certainly seen those pictures of cargo containers stacked up like Lego blocks at overcrowded ports around the country. One bottleneck's affecting actual glass bottles. I talked to Paul Guglielmo, who's a pasta sauce maker in Rochester, N.Y. He's now paying 42% more for the pint jars he uses to contain his sauce than he used to. He's absorbed some of that price increase through more efficient bottling, but he's also having to pass some of it along to consumers.
PAUL GUGLIELMO: The grocery store will tell you that the item you're trying to buy went up because the distributor raised their price, and the distributor will tell you that the brand owner raised their price. And I'll tell you that all my suppliers raised their prices, and so it all trickles down.
HORSLEY: Grocery prices were another big driver of inflation last month. September prices were up 4.5% from a year ago, and grocery prices rose more than 1% just in the last month.
MARTÍNEZ: NPR's Scott Horsley. Thanks a lot.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.