Inflation in America is being powered by diesel.
asserted
Inflation → power → diesel
The price of the fuel, used by farmers and truckers, is up more than 75% since the start of the Iran war in late winter.
asserted
price → use → winter
Diesel costs have become a particular concern for economists, who say that higher diesel fuel costs trickle down into “just about everything.”
asserted
costs → become → everything
And the final government inflation report before November’s pivotal midterm elections will likely reflect how much of a headache it’s become for businesses and consumers.
asserted
it → reflect → businesses
The Bureau of Labor Statistics is set to release its September consumer price index report at 8:30 a.m. Wednesday.
asserted
Bureau → set → a.m.
It’s expected to show the annual rate of inflation rose to 3.7% from 3.4%, according to a survey of economists from Dow Jones.
uncertain
rate → expect → Jones
From August to September, prices are expected to have risen by 0.6%.
asserted
prices → expect → %
The monthly jump, if confirmed, would also be one of the largest in years.
asserted
jump → confirm → years
Since August, oil prices have risen to more than $105 per barrel from about $80.
asserted
prices → rise → 80
The price of regular gas, which most consumers buy, also remains elevated by more than 45% since late February, when the Iran war was launched.
asserted
war → buy → February
As early voting kicks off this week, a higher inflation reading would come at a precarious moment for Republicans defending majorities in the House and Senate.
asserted
reading → kick → House
Polls consistently find that inflation and the high cost of living are top issues this year for voters in both parties.
asserted
inflation → find → parties
Higher diesel prices this summer and fall have hit agricultural states like Kansas, Iowa and Texas especially hard.
asserted
prices → hit → Kansas
Long viewed as Republican strongholds, all three states have Democrats outperforming in Senate races with campaigns focused on the high cost of living.
asserted
campaigns → view → living
In response to the outcry over the high cost of gas and diesel, President Donald Trump has pulled several policy levers in recent weeks aimed at pushing down prices.
asserted
Trump → pull → prices
But so far, none of them has made much of a dent.
asserted
none → make → dent
The Trump administration has pressured G7 allies to release more diesel stocks, issued an order to allow more widespread use of tax-free diesel, and announced a deal with Russian President Vladimir Putin that Russia release some diesel supplies and drop some of its export restrictions.
asserted
Russia → pressure → restrictions
The latest action has drawn global backlash after Trump also eased some sanctions on Russia in order to facilitate the Russian diesel deal.
asserted
Trump → draw → deal
Consumers’ wages are still lagging behind the rate of inflation.
asserted
wages → lag → inflation
As of September, wage growth was 3% and has not grown faster than inflation since March.
asserted
growth → grow → March
Still, despite the pressure on prices and wages, consumers continue to spend.
asserted
consumers → continue → prices
The CEOs of the nation’s largest banks on Tuesday reported that consumers remain spending at a steady pace.
asserted
consumers → report → pace
“While various headwinds, most recently higher energy prices, and tighter monetary policies have been challenging, the global economy has held up remarkably well in the U.S.,” said Citigroup CEO Jane Fraser.
asserted
Fraser → hold → U.S.
“While much has been made of the AI boom, the consumer is still driving much” of the economy’s momentum, she added.
asserted
she → make → momentum
“Our data shows that our consumer and business customers are doing well,” said Wells Fargo CEO Charlie Scharf.
asserted
Scharf → show → ?
JPMorgan Chase CEO Jamie Dimon said the economy “continued to be fueled by strong business investment and ongoing consumer spending” over the last three months.
asserted
economy → say → months
Core inflation, which is more closely watched by the Federal Reserve and which strips out food and energy prices, is expected to rise as well, to 2.5%.
asserted
which → watch → %
If confirmed, that would be its highest level since June.
asserted
that → confirm → June
One key sector fueling higher core inflation is airfare.
asserted
sector → fuel → inflation
“Airfares remain the core category most directly affected by higher oil prices,” said economists at Morgan Stanley.
asserted
economists → remain → Stanley
“Airfare CPI is already up 23% y/y, which raises the question of how much further prices can increase.
asserted
prices → raise → question
They noted that jet fuel prices have risen 90% since this time last year, “and typically account for roughly 20-30% of airline operating costs.”
asserted
prices → note → costs
As a result, “Airlines may already be approaching full pass-through of the increase in fuel costs to consumers.”
uncertain
Airlines → approach → consumers
Another major consumer item that could impact September’s inflation rate: pricier iPhones.
Apple’s latest iPhone began selling on Sept. 12, and Morgan Stanley’s economists said “price increases were generally in the 10%-14% range across models.”
uncertain
increases → impact → models
“Given Apple’s roughly 50% share of the U.S. smartphone market,” this could translate into what they said could be a small upside impact on overall inflation.
uncertain
they → give → inflation
But while these higher iPhone prices are likely contributing to September’s inflation, they are also the product of inflation earlier his year — inflation that traces back to the ever-expanding buildout of AI data centers.
asserted
that → contribute → centers
The race to build data centers and chips for AI has triggered a scramble for memory, in particular.
asserted
race → build → memory
Given that the supply of memory chips is limited, prices have soared at an unprecedented pace.
asserted
prices → give → pace
In June, Apple told NBC News that it has “never seen a component price increase this much, this quickly.”
asserted
price → tell → News
Economists at Goldman Sachs also expect to see a jump in September in other key consumer categories.
asserted
Economists → expect → categories
…and 8 more, not listed.
The Aporia
