Gasoline remained above $4 per gallon as oil climbed past $100 a barrel, squeezing household budgets even as banks posted record profits. Renewed violence in the Iranian conflict has driven energy costs higher. Households and businesses bear the added expense, while financial institutions gain from lending and market activity.
Who Pays for the Price Shock
A Bloomberg survey puts the median forecast for September’s consumer price index at a 0.6% monthly increase, compared with 0.4% a month earlier. That would mark the biggest rise in five months. The Bureau of Labor Statistics is scheduled to release its figures Wednesday. Separately, the article says the Labor Department is expected to report a 0.2% monthly increase and a 3.6% rise from a year earlier. The projections don’t match, and neither is an official result yet.
The U.S. war with Iran is entering its eighth month. Energy costs have piled more pressure on household budgets and businesses. Diesel stayed just below the record highs reached in September. The account ties renewed fighting in the conflict to higher oil and gasoline prices, but gives no sign that households can control those forces.
On Thursday, the Labor Department is scheduled to publish the producer price index, which tracks inflation before it reaches consumers. Economists expect the index to rise from 5.4% in August, after climbing from 4.8% in July. Gas prices spiked after fighting resumed in the Middle East, driving inflation higher in August. Neither side in the Iranian conflict is willing to concede ground.
PepsiCo said last week that it would raise prices on Doritos and other products, pointing to higher fuel, aluminum and commodity costs. Fuel and materials costs feed into consumer prices. People buying groceries are left to cover the bill.
Rates, Housing and the Financial Apparatus
High interest rates burden households and businesses, while banks can charge more for loans. The Federal Reserve recently raised its benchmark rate to cool inflation, and it’s leaning toward another increase by year’s end. The article also says the inflation forecast supports expectations that the Fed won’t raise rates this month. Those reports and decisions loom over households already paying more.
Mortgage rates have shut out prospective home buyers. Freddie Mac said the average long-term U.S. home-loan rate had climbed for a seventh straight week, reaching a level not seen in nearly three years. Housing has slumped since 2022. Sales of previously occupied homes barely moved last year, landing at a 30-year low. The National Association of Realtors plans to report September existing-home sales Tuesday. Economists expect sales to hold steady from August, when they fell to their slowest annual pace in more than a year.
Banks, meanwhile, have posted record profits this year. Volatile stock markets lifted trading activity, commissions and fee revenue, while consumer spending supported fee and lending income. Analysts expect JPMorgan Chase to report a 47% profit increase and Citigroup a 61% increase Tuesday. Bank of America is expected to report a 36% gain Wednesday. Morgan Stanley and other financial institutions will also report results this week.
Election Talk, No Shared Control
Inflation is drawing attention in U.S. midterm elections, now less than a month away. The account describes the political focus but identifies no proposed electoral or legislative measure that would shift control over energy prices, lending or the Federal Reserve’s rate decisions. Nor does it report grassroots organizing, mutual aid or a community response to rising costs.
More figures are on the way. Economists expect retail sales to rise 0.65% in September, following a 1.2% increase in August, while the National Retail Federation is scheduled to issue its holiday forecast. These figures will show what people spend. They won’t give households power over the forces that set prices.