Everyone knows inflation is on fire. But here’s what’s really fueling it

Meat is seen in a supermarket as rising inflation affects consumer prices in Los Angeles, California, June 13, 2022.

There is inflation at the gas pump and grocery store. There are hundreds of ways that the government can measure price increases.

Food, energy and shelter are the three biggest inputs for the consumer price index.

They make up more than half of the inflation rate. They are the main sources of perception of inflation.

People tend to notice price fluctuations in things they do a lot, like going to the grocery store and filling up the gas tank Gas prices make up a small portion of the household budget.

The basics are what the chief U.S. economist at Royal Bank of Canada says. Spending money on that is what you need to do. You have to spend money on shelter, you have to spend money on food, and most of the time you have to spend money on energy. Consumer spending is challenged by inflation.

The answer is more complicated when it comes to figuring out where the inflation comes from.

The Bureau of Labor Statistics calls it the biggest component. Shelter, lawn care companies, veterinary bills and car rentals are more obscure than you might think. The group amounts to more than half of the consumer price index.

Commodities less food and energy are the next biggest. Household supplies, appliances and clothing make up 20% of the index.

Energy commodities, such as fuel oil and propane, make up 4.8% of the consumer price index, while energy services, including electricity and piped gas, make up 3.4%.

The Federal Reserve and other economists look at core inflation, which excludes prices that fluctuate a lot, to get a better picture of inflation. The headline was up 8.6% in May, while the core inflation was up six percent.

Powell acknowledged on Wednesday that now is a good time to focus on inflation.

The central bank leader asked why the public would be distinguishing between core inflation and headline inflation. Headline inflation is what people experience and core inflation is what we think about. They have no idea what core is. They wouldn't.

Raising interest rates hasn't made much of a difference to inflation so far.