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Prices Rising at 5.4% Annual Rate, Could Raise SD Minimum Wage to $10

Lumber prices are coming back down, but prices for used cars and energy and lots of other stuff bounced up in June, raising the Consumer Price Index 0.9% in June and 5.4% for the last twelve months:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in June on a seasonally adjusted basis after rising 0.6 percent in May, the U.S. Bureau of Labor Statistics reported today. This was the largest 1-month change since June 2008 when the index rose 1.0 percent. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment; this was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.

The index for used cars and trucks continued to rise sharply, increasing 10.5 percent in June. This increase accounted for more than one-third of the seasonally adjusted all items increase. The food index increased 0.8 percent in June, a larger increase than the 0.4-percent increase reported for May. The energy index increased 1.5 percent in June, with the gasoline index rising 2.5 percent over the month [Bureau of Labor Statistics, “Consumer Price Index—June 2021,” 2021.07.13].

Used vehicle prices have jumped 45.2% since last June. Energy prices have risen 45.1%.  in a year, while people energy (food!) is up only 2.4%.

If we sustain a 5.4% yearly increase in the Consumer Price Index, then come January 1, South Dakota’s minimum wage will increase from $9.45 an hour to $10.00… which is still well below the $13/hour starting wage that Wendy’s at 41st and Louise in Sioux Falls is currently advertising on its blinky sign.

5 Comments

  1. Neal 2021-07-14

    Weren’t you disputing the obvious inflationary trends a couple of weeks ago? It’s getting harder and harder to deny…

  2. Cory Allen Heidelberger Post author | 2021-07-14

    I still dispute them, Neal. More importantly, I dispute those who are trying to twist this ever-changing data into a political argument. Tell us, Neal: what is causing these price increases? Do the causes include anything we can do anything about or would want to do anything about?

    For instance, the temporary increase in lumber prices appears to have come from lots of people staying home during the pandemic and deciding to improve their homes, as well as people deciding to up and build new homes. To deter higher lumber prices, should we have deterred home improvement and new home construction?

    For another instance, the rising prices of used cars appear to come from simple demand, as well as supply issues based on rental car companies restocking the fleets they pared down during last year’s slump with used cars. Should we impose price controls on used cars? Should we limit the number of used cars rental companies can purchase? Should we invoke the Defense Production Act to make more microchips and clear the backlog for car manufacturers?

    If the current price fluctuations are merely the product of the free market dealing with market forces, why should we worry? Doesn’t the market know best? If the current price fluctuations are the product of specific government policies, what are those policies, would reversing those policies have any impact on prices, and would reversing those prices have any negative effects on the economy or our quality of life?

    That’s what I’m saying: prices may be increasing in certain sectors, but I’m not seeing price increases that warrant any political blame or political intervention. People want to buy more stuff, so prices go up—that’s how the system is supposed to work, right?

  3. Vi Kingman 2021-07-14

    Another example. The right has been going wild blaming Biden for gas prices going up. Let’s take a look at what obviously is going on.
    Last year, due to the pandemic, people weren’t driving so the oil supply went up. If you add the fact that Russia and Saudi Arabia were dumping large amounts of oil onto the market, adding to the supply.
    So with the large amount of supply prices went down. I read they couldn’t give a barrel of oil away.
    Now we’re opening up and people are traveling a lot more (check out traffic on the interstates) and demand is more so, guess what, prices go up-that’s how the system is supposed to work.
    Trying to explain this to Trumpsters is impossible.

  4. Porter Lansing 2021-07-14

    Used car price increases are the cause of USA’s current inflation.

    Used cars are in demand because there aren’t enough computer chips to build new cars.

    It’ll change soon.

  5. Richard Schriever 2021-07-14

    Out here on the road, I’ve noticed that hotel room prices have increased quite a bit. Even at a $250+ range – it’s hard to find a room. LOTs of pent up touring going on. Tourism (driving around and looking at things) is one thing you can do a lot of without getting close to hardly anyone.

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