Labor the inflationary factor to watch
The latest Consumer Price Index for April was the highest one-month jump reported since September 2008 but an economist with American Farm Bureau says he’s not concerned inflation will last long term.
Bob Young tells Brownfield supply chain disruptions and labor costs are mainly behind upticks higher with labor likely to have the largest impact this year.
“I think it’s going to be labor costs that are really going to drive what these inflationary expectations are as we roll forward,” he says. “What’s it going to take for folks to decide to go back to work?”
Food at home purchases were still higher than food away from home but Young believes the months ahead will be more telling.
“By the time we get out to the third quarter, these supply chain disruptions have been worked through, consumer demand is going to be pretty strong because we had some of the highest saving rates we’ve had in years,” he says.
The index was more than four percent higher for the year but less than one percent on the month. Young says if the month-to-month growth rate continues, however, CPI could increase by nearly 10 percent in 2021 which is more concerning.