Starbucks (SBUX) started raising prices on some of its drinks Tuesday by 5 to 20 cents. Next month the cost to consumers of Starbucks' packaged coffee will increase by $1 per 12 ounce bag. In the case of Starbucks, this could be a business move or a reaction to raw coffee prices, which have risen this year. But you can also add it to a list of price hikes that have some concerned about inflation picking up in the economy.
Making the case that inflation is one of the biggest economic concerns right now, Heidi Moore, U.S. finance and economics editor at The Guardian, points to meat prices rising 7.7% this year, dairy up 4.2%, car insurance up 5% and tuition and public transportation up more than 3%.
Yet Federal Reserve chair Janet Yellen just last week downplayed inflation concerns, saying it's rising in-line with the Fed's expectations and asserting that the data is noisy. (The Fed is charged with price stability as one of its mandates.)
"All of these prices are rising and for the Fed to look the other way, even briefly, I think would be a little bit disingenuous," Moore tells us in the above video. That's "because this is a real problem people are living through and suffering through. Not only are they spending a lot more just on basics, their incomes are stagnant and their debt is really high."
Inflation as measured by the consumer price index has picked up -- it rose the most in more than a year in May, rising 2.1% for the past 12 months and 2% if you strip out the more volatile food and energy costs. That 2% increase is still consistent with the Fed's target for inflation. Meanwhile, the central bank's preferred gauge for inflation is the personal consumption expenditures (PCE), which indicates inflation is more tame than that.
Moore points out the PCE doesn't include food and gas -- "so imagine how much of a family's budget goes toward food and gas?" She believes the Fed can't stop the bond-buying stimulus it's winding down "until it pretends it believes things are getting better ... On inflation, which is actually a real world thing, I think that the Fed is missing the mark."
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