Energyflation? More like everything-flation

SPEAKER_1 (0:00)

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Kai Ryssdal (0:31)

Well, that wasn't what we wanted to hear now, was it?

From American Public Media, this is Marketplace.

In Los Angeles, I'm Kai Ryssdal. It is Wednesday today, 14 October. Good as it always is to have you along, everybody. You know, today was one of those days where government economic data comes out, and you, the average American consumer, goes, Yeah, I knew that. The Bureau of Labor Statistics told us this morning that consumer prices rose 3.7% in September from one year ago. It was a 6 tenths percent increase month over month. That's August to September. And I know maybe that doesn't sound like a lot, but it is. I also know you think the next thing I'm going to say is that energy prices are the main culprit, which, yes, okay, they are. But they're not the only culprit. Marketplace's Brie Benishaw starts to solve.

Sabri Benishur (1:37)

If energy prices are a dumpster fire in the economy, you want to know if it's going to spread. And to do that, you got to look at how dry and tindery the area around the dumpster is. Like, what's inflation doing over in services?

Omair Sharif (1:53)

Services inflation is just not dampening down at all.

Sabri Benishur (1:57)

Omer Sharif is founder of Inflation Insights. There are areas of mild concern around the dumpster.

Omair Sharif (2:03)

Recreation services were relatively strong today. Hotel rates have moved up sharply the last several months. Airfares are still rising as airlines are trying to recover jet fuel costs.

Sabri Benishur (2:14)

On the other hand, some other prices have come down. Beef, pork, milk. You can actually look at all the goods and services the government measures and calculate how many of them are seeing inflation below 2%, which people tend not to notice, and how many things have inflation above 2%, which people do notice.

Eric Winograd (2:32)

And right now, it's about a 50-50 split.

Sabri Benishur (2:35)

Eric Windegrad is chief economist at Alliance Bernstein. The dumpster fire is not spreading too much.

Eric Winograd (2:41)

The truth is that the second round effects or the knock-on effects from oil and into other prices have been a lot more limited than I think most people would have expected.

Sabri Benishur (2:50)

Markets are still betting the Federal Reserve is going to hose down the economy with an interest rate hike in December just to be safe. Now, whatever is going on with inflation around the dumpster, the actual dumpster is still on fire.

Alan Detmeister (3:03)

I mean, you can't really just exclude energy. People can't just not pay for gas, not pay their heating bills.

Sabri Benishur (3:10)

Alan Detmeister is an economist at UBS Investment Bank. More than half the inflation we are seeing today comes from higher gas and diesel prices alone, and that inflation has been higher than wage growth for six months in a row after the Iran War began. In New York, I'm Sabri Benishur for Marketplace.

Kai Ryssdal (3:30)

Hey, you remember back in the depths of the pandemic, all the supply chain misogast that was going on, the months it would take for something you had ordered to show up, the inflation that followed, all those stories about how much more it was costing to send a shipping container from Shanghai to LA.

Here's the 2026 version. The supply chain in question is crude oil, the inflation, I mean, Sabri was just talking about that, and instead of container ships, it's crude oil tankers, which are running very nearly $80 million a pop to send one of them, one of them full of oil from the US Gulf Coast to China. Marketplace's Elizabeth Troval has our story.

Elizabeth Troval (4:11)

Around the world, out on the open sea, there are only 900 or so VLCCs.

Nick Watt (4:17)

VLCC stands for Very Large Crude Carrier. They carry 2 million barrels.

Elizabeth Troval (4:22)

Nick Watt is with Argus Media. He says those carriers used to charge $3 to $6 per barrel before the war.

Nick Watt (4:29)

And now it is absolutely skyrocketed. And freight rates for VLCCs carrying a US crude to Asia, about $38 per barrel.

Elizabeth Troval (4:39)

That price reflects the increased demand for a limited number of tankers. Because of all the extra lifting it takes to move oil around the world these days. Dan Pickering is with Pickering Energy Partners.