Where It Hurts

I do think it's a bit tragic that everyone learned during the post-covid era, once again, that everybody hates inflation, even though I don't think that's precisely true. I actually don't think people are impacted too much by 4% versus 2% inflation, which is really what that debate is normally about, whether the Fed needs to put the brakes on every time the rate "spikes" to 2.2%.

I mean, I don't think they'd notice too much if that 4% was pure inflation, spread perfectly evenly across all goods and services (and wages!). Only people with real money would care. But that's not what happened. The prices of very visible things spiked due to post-covid supply chain and labor issues, and we just called that "inflation." General inflation was high for a bit, but food price inflation was even higher, running above 10%. That's the kind of thing that enraged people.

And, like now, it wasn't the "inflation" of Milton Friedman's mind, happening because the Fed was printing too much money. It was cost-push inflation.

Though Biden's cost-push inflation wasn't due to his actions.

Anyway...

Driving that increase were substantial price hikes for things like fresh veggies. On an annualized basis, fresh vegetable prices are more than 44% higher today than they were three months ago.

Keeping interest rates high to "fight" cost-push inflation is only obviously correct if you think fighting inflation trumps all other concerns.