Fast take: Used cars, new couches cost more, but unlikely to impact U.S. election
September 11, 2020
(Reuters) – Consumer prices aren’t rising fast enough to make inflation a major issue in the upcoming U.S. presidential election, the latest data from the Labor Department suggests. In fact, the trend upwards is a sign the economy is recovering.
Still, Americans in the market for a new couch or a used car got a sticker-price sting last month.
The index for the price of used cars and trucks rose 5.4% in August from the previous month, the fastest in more than 51 years, the Labor Department reported on Friday. Household furnishings rose 0.9%, the biggest monthly increase since February 1991.
Overall, the consumer price index rose 0.4% in August from July, and 1.3% from a year earlier.
That’s tame, and unlikely to sway voters as they weigh their options for the Nov. 3 election.
Republican presidential nominee Ronald Reagan seized on double-digit inflation in his 1980 challenge to then-President Jimmy Carter, telling voters it “robbed” them of the ability to plan for the future, and Reagan won in a landslide.
Today, with the unemployment rate high and some 29 million Americans on some form of unemployment insurance, the fact that prices are rising as much as they are is the bigger surprise.
“The price increases this time reflect low inventory – as demand is outstripping supply,” said Paul Ashworth, chief U.S. economist for Capital Economics. “There has been a lot more upward pressure on prices than we would have expected given the extent of the collapse in the real economy.”
Graphic: Inflation? Depends what you are buying –
Reporting by Ann Saphir; Editing by Heather Timmons and Paul Simao