Thursday’s release of the Bureau of Labor Statistics (BLS), was made possible by the Bureau of Labor Statistics. latest report on inflationThis is bad news for working people. According to the Consumer Price Index (CPI) — which measures the cost of consumer products — inflation for all goods, including food and energy, rose again in January, this time by 0.6 percent. This latest increase brings inflation’s annual rate to 7.5 percent. This figure is unprecedented since the early 1980s, when inflation was out of control and stagnant economies were threatening the economic viability of American workers. Wages for the same period have increased slightly, but not as much. between 4 and 4.4 percent, this is still far less than the current rate of inflation, and makes up for only a fraction of the value that workers’ wages have lost over the last several decades of neoliberal austerity.
It is not surprising that these latest figures are higher than the expectations of most bourgeois analysts, who have claimed for months that the current inflation rate is a temporary phenomenon due in large part to the pandemic, rising oil prices, and weakening and overstressed global supply chain. These factors have definitely contributed to rising costs but they are not the end of it. Large corporations have used the inflation crisis to raise the prices of basic goods, even those not affected by supply chain disruptions, to make record profits, while ignoring the needs of workers and consumers.
As economist Matt Stoller explained in DecemberIncreased profit seeking by major companies in the meatpacking, retail, and auto industries, among others, is leading a generalized rise in prices across the economy. It could account for as high as 3 percent of the current annual inflation rate. Inflation and the downs and ups of the pandemic have not affected corporate profit margins. They have actually risen over the past year. levels not seen since 1950They are now earning more than they were before the pandemic. Companies range from Exxon Mobil to Tyson and AstraZeneca to Amazon and Starbucks. making a killingEven as workers struggle to retain the value of their low wages, people all over the globe are still struggling to make ends meet. While bourgeois economists like Stoller believe this problem can be controlled through anti-monopoly legislation or taxes on excess profits, such rapacious profit seeking and increasing exploitation of working people is endemic to capitalist production and can’t be legislated away.
Despite this corporate win, however, the Dow Jones Industrial Average fell almost 1.5The report revealed that percent and other indexes fell sharply. This was due to concerns about a faster and more aggressive response by Federal Reserve to the crisis. Many analysts predict that the Fed will raise interest rates as high as 1.75 percent by the end this year. This could be a full-point increase, as it appears. Interest rates are currently at or near zero. While on the surface, interest rate hikes may seem to be of little concern for most working people who have few, if any, investments, they are designed to “cool the economy” by simultaneously discouraging spending and encouraging savings, and this can have serious consequences for working people. As we [Left Voice] explained last month:
Higher interest rates can have a real impact on workers. They make it more costly to spend money and decrease disposable income. They can make basic needs more difficult for the most marginalized members of society. Higher interest rates have historically prevented U.S. companies expanding employment.
Interest rate hikes have been used historically as a tool to punish workers and undermine the power of unions. For example, in the 1980s, Paul Volker, Federal Reserve chair, and the Reagan administration oversaw a policy to increase interest rates that resulted in the loss of millions manufacturing jobs and a higher than 10 percent unemployment rate.
Additionally, higher interest rates will almost certainly lead more austerity. Cities and states will face increasing borrowing costs in order to maintain or finance new investments, including education, infrastructure, and services to the poor and homeless. Many of these people are still suffering from the adverse economic and health effects of pandemic.
The ongoing inflation crisis, whose cost is being passed entirely onto working people, is another example of the failures of a system that prioritizes chaotic production over a planned economy that is based on human needs. While the ruling class claims that there is no solution to this crisis that doesn’t cause more pain for the working class, it does not mean that there is nothing to fight. We can unite the working classes to demand more of the value that we produce, resist austerity, fight for automatic wage and benefits increases, and demand a freeze in the price of essential goods and necessities, which are paid for by the profits of corporations that manage their production. Only in such struggles can we discover and build our true strength, as a class capable of directly vying to control the productive forces of society.
