Inflation in U.S. Falls, Remains High
Posted on 04/12/2023
Inflation data from March 2023 reveals a 5% year-over-year increase in the U.S., according to the Labor Department. The Federal Reserve has long held a target of 2%, although that number can be adjusted by The Federal Reserve. U.S. Treasury Secretary Janet Yellen has been encouraged that “Commodity prices have eased. Supply-chain snarls are being resolved. The global financial system has generally proven quite resilient.” Shelter costs remain expensive and are rising due to the total costs of owning and maintaining property. Wages have risen 4.2% year-over-year, but remain below the level of inflation. The inflation data has ramifications for the Fed’s upcoming decision to raise interest rates or pause.
Inflation Impacts Pensions
The OECD, or Organization for Economic Cooperation and Development, says there is cause for concern: “Inflation has reached levels not seen in the last four decades in most OECD countries, hitting disproportionally the most vulnerable, low-income households.” The OECD reports “pensioners are suffering.” It’s not as simple as adjusting for the CPI says the OECD: “There have been debates in some countries about the limitations of using the CPI in pension indexation to capture changes in the cost of living of retirees. The main related questions refer to the appropriate basket of goods and services to take into account.” The net effect, they argue, is a system that doesn’t adequately provide for all retirees sufficiently to meet their needs. Methods and rates of success vary by pension and country. For example, the State Pension in the U.K. is set to rise by 10.1% (the highest rise ever recorded), while in Germany, the increase is below the level of inflation.
