Here’s the inflation breakdown for October 2022 — in one chart
People shop for bread at a supermarket in Monterey Park, California on Oct. 19, 2022.
Frederic J. Brown | Afp | Getty Images
Inflation was cooler than expected in October, although household staples such as shelter, food and energy remained among the largest contributors to consumer prices still rising at a historically fast pace, the U.S. Bureau of Labor Statistics said Thursday.
Inflation is a measure of how quickly the prices consumers pay for a broad range of goods and services are rising.
The consumer price index, a key inflation barometer, jumped by 7.7% in October relative to a year earlier — the smallest 12-month increase since January. Economists expected a 7.9% annual increase, according to Dow Jones. Basically, a basket of goods and services that cost $100 a year ago costs $107.70 today.
The annual rate is down from June’s 9.1% pandemic-era peak and September’s 8.2% reading, but is hovering near the highest levels since the early 1980s.
“That’s obviously still very high,” said Andrew Hunter, senior U.S. economist at Capital Economics, of October’s reading. “But at least it’s a move in the right direction.”
A decline in the annual inflation rate doesn’t mean prices fell for goods and services; it just means prices aren’t rising as quickly.
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While the headline annual reading is generally easier for consumers to understand, the monthly change is a more accurate gauge of near-term trends, i.e., if inflation is speeding up or slowing down, economists said.
The CPI rose 0.4% from September, according to the BLS. Economists expected a 0.6% monthly increase.
“For the past year to 18 months, we’ve seen a lot of 0.4%, 0.5%, 0.6%,” Hunter said. “It’s the reason annual inflation has been so high.”
Consistent monthly readings in the 0.2% range would suggest inflation was under control, he said.
The ‘pervasiveness’ of price increases
A healthy economy experiences a small degree of inflation each year. U.S. Federal Reserve officials aim to keep inflation around 2% annually.
But prices started rising at an unusually fast pace starting in early 2021, following years of low inflation.
As the U.S. economy reopened, a supply-demand imbalance fueled inflation that was initially limited to items such as used cars, but which has since spread and lingered longer than many officials and economists had expected.
“That’s the crux of the problem: the pervasiveness of inflation,” said Greg McBride, chief financial analyst at Bankrate.
Inflation was a top concern for voters heading into Tuesday’s midterm elections. An NBC News poll issued last weekend found 81% of respondents were either somewhat dissatisfied or very dissatisfied with the state of the economy — a level unseen since the 2010 midterms.
The typical U.S. household spends $445 more a month to buy the same items it did a year ago, according to an estimate from Moody’s Analytics based on September’s CPI report.
Meanwhile, pay for many workers hasn’t kept pace with inflation, translating to a loss of purchasing power. Hourly earnings have fallen 2.8% in the last year after accounting for inflation, according to the BLS.
Food, energy and housing are top contributors
Large and consistent price increases in food, energy and housing have been troubling, despite some recent improvement, McBride said.
They’re necessities that constitute a large share of household spending, making inflation “so problematic” for households, he said.
“You can’t go without eating, you can’t go without cooking or heating the house and you need a roof over your head,” McBride said. “Those are three categories that continue to drive these high levels of inflation.”
Housing represents the biggest share of average consumer budgets, accounting for 34% of household spending in 2021, according to the most recent U.S. Department of Labor data. Transportation, which includes gasoline, and food are No. 2 and No. 3, respectively, at 16% and 12%.
Any meaningful relief for household budgets is something that is still well over the horizon.
Greg McBride
chief financial analyst at Bankrate
Shelter prices increased in October, jumping 0.8% from September — the largest monthly increase in that category since August 1990, according to the BLS. The category is up 6.9% in the last year.
The “food at home” index — or grocery prices — jumped 12.4% in October versus the same time a year ago. That’s an improvement from 13.5% in August, which was the largest 12-month increase in more than 40 years, since 1979.
The energy category — which includes gasoline, fuel oil, natural gas and electricity — was up 17.6% last month relative to October 2021. That’s a decline from September’s 19.8%.
“Any meaningful relief for household budgets is something that is still well over the horizon,” McBride said.
Gasoline prices had been a primary irritant for many Americans earlier in the year. Prices at the pump have retreated from summer highs of more than $5 a gallon nationwide, but edged up slightly in the past week; they currently sit at an average $3.80 per gallon, per AAA.
‘We have a ways to go’
“Core” inflation — a measure that strips out food and energy costs, which can be volatile — is important in terms of predicting future inflation trends, economists said.
The measure gives a sense of how broad-based inflation has gotten. Core inflation was 6.6% in September, the largest 12-month increase since August 1982. Core inflation was up 6.3% in October over a year ago; the index rose 0.3% during the month versus 0.6% in September.
Shelter, which includes rent, was the “dominant factor” in monthly increase in “core” CPI, according to the BLS. It accounted for 40% of annual core inflation.
The CPI generally lags price dynamics in the broad housing market and likely isn’t an accurate present-day snapshot of shelter prices, economists said. Home sales and mortgage volumes have slowed significantly, leading some to declare the U.S. is in a housing recession.
Other “notable” increases in the past year include medical care (up 5%), household furnishings and operations (8.4%), new vehicles (8.4%), and personal care (6.4%), the BLS said.
Monthly increases came from shelter, motor vehicle insurance, recreation, new vehicles and personal care, according to the BLS. There were also some monthly declines: used cars and trucks, medical care, apparel and airfares, it added.
“Price pressures remain evident across a broad range of goods and services,” Jerome Powell, chairman of the Federal Reserve, said during a press conference Nov. 2.
The central bank has been raising borrowing costs aggressively to cool the economy and reduce inflation. Powell signaled that policy would likely continue for the foreseeable future.
“I would also say it’s premature to discuss pausing [interest-rate increases],” Powell said. “And it’s not something that we’re thinking about; that’s really not a conversation to be had now.”
“We have a ways to go.”
Inflation isn’t just a U.S. phenomenon
Inflation isn’t a problem in just the U.S. Indeed, it’s been worse elsewhere.
For example, consumers in the United Kingdom saw prices increase 10.1% annually in September, tying a 40-year high hit in July.
But on the global stage, inflation first showed up in the U.S., Hunter said. That’s partly due to Covid-related restrictions unwinding sooner in many states relative to the rest of the world and federal support for households kickstarting the economic recovery.
“The U.S. has been a leading indicator for what’s happened to inflation in other countries,” Hunter said.
Inflation is a global problem worsened by geopolitical factors such as the ongoing Russian invasion of Ukraine. Pictured: damage in Donetsk, Ukraine, on Nov. 5, 2022, after shelling.
Anadolu Agency | Anadolu Agency | Getty Images
Americans had more disposable income as the economy reopened, the result of federal funds such as stimulus checks and pent-up demand from staying at home. Meanwhile, Covid-19 lockdowns roiled global supply chains — meaning ample cash ran headlong into fewer goods to buy, driving up prices.
Those supply-chain issues are “only now beginning to unwind,” Hunter said. But higher labor costs — the result of ongoing worker shortages and wages that have risen near their fastest pace in decades — have led to upward pressure on the cost of services, too, he said.
Russia’s invasion of Ukraine also fueled a surge in commodity prices — for crude oil and grain, for example — which has fed into higher costs for gasoline and food, Hunter added.
High energy costs have broad ripple effects on other goods, which become more costly to produce and transport.
“I think this is something that will likely take much of 2023 to unfold, if we’re lucky,” McBride said.
Wind energy powered 20% of all electricity consumed in Europe (19% in the EU) in 2024, and the EU has set a goal to grow this share to 34% by 2030 and more than 50% by 2050.
To stay on track, the EU needs to install 30 GW of new wind farms annually, but it only managed 13 GW in 2024 – 11.4 GW onshore and 1.4 GW offshore. This is what’s holding the EU back from achieving its wind growth goals.
Three big problems holding Europe’s wind power back
Europe’s wind power growth is stalling for three key reasons:
Permitting delays. Many governments haven’t implemented the EU’s new permitting rules, making it harder for projects to move forward.
Grid connection bottlenecks. Over 500 GW(!) of potential wind capacity is stuck in grid connection queues.
Slow electrification. Europe’s economy isn’t electrifying fast enough to drive demand for more renewable energy.
Brussels-based trade association WindEurope CEO Giles Dickson summed it up: “The EU must urgently tackle all three problems. More wind means cheaper power, which means increased competitiveness.”
Permitting: Germany sets the standard
Permitting remains a massive roadblock, despite new EU rules aimed at streamlining the process. In fact, the situation worsened in 2024 in many countries. The bright spot? Germany. By embracing the EU’s permitting rules — with measures like binding deadlines and treating wind energy as a public interest priority — Germany approved a record 15 GW of new onshore wind in 2024. That’s seven times more than five years ago.
If other governments follow Germany’s lead, Europe could unlock the full potential of wind energy and bolster energy security.
Grid connections: a growing crisis
Access to the electricity grid is now the biggest obstacle to deploying wind energy. And it’s not just about long queues — Europe’s grid infrastructure isn’t expanding fast enough to keep up with demand. A glaring example is Germany’s 900-megawatt (MW) Borkum Riffgrund 3 offshore wind farm. The turbines are ready to go, but the grid connection won’t be in place until 2026.
This issue isn’t isolated. Governments need to accelerate grid expansion if they’re serious about meeting renewable energy targets.
Electrification: falling behind
Wind energy’s growth is also tied to how quickly Europe electrifies its economy. Right now, electricity accounts for just 23% of the EU’s total energy consumption. That needs to jump to 61% by 2050 to align with climate goals. However, electrification efforts in key sectors like transportation, heating, and industry are moving too slowly.
European Commission president Ursula von der Leyen has tasked Energy Commissioner Dan Jørgensen with crafting an Electrification Action Plan. That can’t come soon enough.
More wind farms awarded, but challenges persist
On a positive note, governments across Europe awarded a record 37 GW of new wind capacity (29 GW in the EU) in 2024. But without faster permitting, better grid connections, and increased electrification, these awards won’t translate into the clean energy-producing wind farms Europe desperately needs.
Investments and corporate interest
Investments in wind energy totaled €31 billion in 2024, financing 19 GW of new capacity. While onshore wind investments remained strong at €24 billion, offshore wind funding saw a dip. Final investment decisions for offshore projects remain challenging due to slow permitting and grid delays.
Corporate consumers continue to show strong interest in wind energy. Half of all electricity contracted under Power Purchase Agreements (PPAs) in 2024 was wind. Dedicated wind PPAs were 4 GW out of a total of 12 GW of renewable PPAs.
Read more: Renewables could meet almost half of global electricity demand by 2030 – IEA
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss the official unveiling of the new Tesla Model Y, Mazda 6e, Aptera solar car production-intent, and more.
The show is live every Friday at 4 p.m. ET on Electrek’s YouTube channel.
As a reminder, we’ll have an accompanying post, like this one, on the site with an embedded link to the live stream. Head to the YouTube channel to get your questions and comments in.
After the show ends at around 5 p.m. ET, the video will be archived on YouTube and the audio on all your favorite podcast apps:
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Here’s the live stream for today’s episode starting at 4:00 p.m. ET (or the video after 5 p.m. ET):
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The Chinese EV leader is launching a new flagship electric sedan. BYD’s new Han L EV leaked in China on Friday, revealing a potential Tesla Model S Plaid challenger.
What we know about the BYD Han L EV so far
We knew it was coming soon after BYD teased the Han L on social media a few days ago. Now, we are learning more about what to expect.
BYD’s new electric sedan appeared in China’s latest Ministry of Industry and Information Tech (MIIT) filing, a catalog of new vehicles that will soon be sold.
The filing revealed four versions, including two EV and two PHEV models. The Han L EV will be available in single- and dual-motor configurations. With a peak power of 580 kW (777 hp), the single-motor model packs more power than expected.
BYD’s dual-motor Han L gains an additional 230 kW (308 hp) front-mounted motor. As CnEVPost pointed out, the vehicle’s back has a “2.7S” badge, which suggests a 0 to 100 km/h (0 to 62 mph) sprint time of just 2.7 seconds.
To put that into perspective, the Tesla Model S Plaid can accelerate from 0 to 100 km in 2.1 seconds. In China, the Model S Plaid starts at RBM 814,900, or over $110,000. Speaking of Tesla, the EV leader just unveiled its highly anticipated Model Y “Juniper” refresh in China on Thursday. It starts at RMB 263,500 ($36,000).
BYD already sells the Han EV in China, starting at around RMB 200,000. However, the single front motor, with a peak power of 180 kW, is much less potent than the “L” model. The Han EV can accelerate from 0 to 100 km/h in 7.9 seconds.
At 5,050 mm long, 1,960 mm wide, and 1,505 mm tall with a wheelbase of 2,970 mm, BYD’s new Han L is roughly the size of the Model Y (4,970 mm long, 1,964 mm wide, 1,445 mm tall, wheelbase of 2,960 mm).
Other than that it will use a lithium iron phosphate (LFP) pack from BYD’s FinDreams unit, no other battery specs were revealed. Check back soon for the full rundown.
Source: CnEVPost, China MIIT
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