Even with the government being shut down (sort of), we still got a release of the latest CPI numbers. The market cheered because the numbers were a little better than expected.
The problem is that our expectations have become too low. After the horrible price inflation of 2022, we are happy when it is “just” 3%. Of course, that 3% is on top of the already-higher prices from the last 5 years.
The CPI showed a rise of 0.3% in September 2025. The year-over-year has gone back up to 3%.
The median CPI is up 3.5% from a year ago.
What happened to the Fed’s target of 2%, let alone the target of an average of 2% over time?
In the face of price inflation at 3%, the Fed is actually lowering interest rates. This doesn’t make much sense at all unless you consider that the Fed may not really care too much about getting price inflation down to 2%.
These are bad numbers on their own. It doesn’t really matter if they beat expectations. The expectations were bad. Perhaps the positive is that we can say that people aren’t expecting much out of the Fed in the way of positive things.
Investors like the news because they see the Fed continuing with its rate cuts. This is all that seems to matter to the general financial media and investors.
My Experience
I went to the grocery store yesterday. My experience was much higher price inflation.
There are dark chocolate bars that I like (2 different brands). They used to be $2.99 or $3.19. I believe it was just earlier this year that they went up to $3.99. Yesterday, they were something like $5.69. Both brands had gone up.
To go up over 40% from last weekend is outrageous. Maybe I will see the occasional sale, but this is the new standard. I probably won’t be buying much here, as I can find cheaper brands at Walmart or Costco.
The price of the eggs I buy did not go up from last week. They are already much higher than they were a couple of years ago.
Sometimes I buy coconut water. I look for sales. The price for a 1-liter bottle went above $6. It was over $5 before. It is not as dramatic as the chocolate bars, but still higher from the weekend before.
I have talked about other food items previously. The price of the organic peanut butter that I buy has gone up over 50% in the last couple of years.
We have a good water filter we use, but we still occasionally buy individual bottles of water in a pack of 24. Have you seen the price? All of the brands have gone up in price as compared to a couple of years ago.
The prices I’m seeing at the grocery store are going up a lot faster than 3% per year. When one product jumps 40% from last week, it tells me something is going on.
Tariffs and Monetary Inflation
Perhaps we are finally seeing the impact of the increased tariffs and the insane swings in what to expect future tariffs to be. The chocolate bars I looked at are probably not imported, but I can’t say for sure. It is also possible that certain ingredients are imported. There were already high tariffs on sugar imports before Trump, but that doesn’t explain the hike in the price.
Sometimes the packaging can get more expensive too. This can be because of tariffs or from general monetary inflation, or both. Another thing I noticed at the grocery store is that the plastic bags for my groceries just seemed to be cheaper and lower quality.
Unlike leftists and even many non-leftists, I am not blaming the grocery store for being greedy. I have no doubt that the store is experiencing higher costs and is just passing them on to the consumer.
My wife actually said to the cashier that we noticed that some prices had gone up. She acknowledged it and said she’s been seeing it too.
We are still getting the effects of the monetary inflation that was rampant in 2020 and 2021. Even though the Fed has been slowly deflating its balance sheet, it is still far higher than it was 5 years ago.
When you add additional tariffs on top of this, it will be hard to tell how much of the price inflation is a result of the taxes on imports versus general monetary policy.
There are so many working parts in the economy, it is really hard to say how this will play out. There will be winners and losers, although more losers overall. The average American will see a relative decline in living standards.
In my case, I can’t justify paying over $5 for a single chocolate bar. I will either eat less of it or find a cheaper brand. And that’s just the cheap stuff. I could easily choose to just buy the chocolate at the higher price. When you start talking about insurance, there oftentimes isn’t as much choice. You can’t just not buy car insurance because you don’t like the higher price.
Consumer demand will shift based on the new realities. Sometimes a business can’t pass along higher costs because consumers will choose not to buy. Less of certain things will be sold. People find cheaper substitutes.
The government and central bank continually make us poorer than we otherwise would be. Price inflation is not dead. If anything, it is going higher. We’ll see if my experience at the grocery store shows up in the October CPI numbers.