Market experts react to higher than expected CPI report: 'The Fed is losing its inflation fight'

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Maria Bartiromo: 'Wages are declining' because of inflation as consumer prices rise

FOX Business host Maria Bartiromo joined 'America's Newsroom' to discuss the impact inflation has on wages as it remains at a four-decade high.

Market experts on Twitter reacted to the "troubling" news that the inflation rate was higher than predicted Thursday. 

The Department of Labor released its consumer price index (CPI) report for the month of September and at 8.2% year over year, the price increase was 0.4% higher than it was last month. The American middle class is feeling the pain caused by their reduced purchasing power. 

Peter Schiff, CEO of Euro Pacific Capital Inc., contended that as bad as the CPI reports have been in recent months, it does not represent the true severity of inflation. 

"Another hotter than expected #CPI surprised investors. Sept. CPI rose .4%, double expectations. YoY prices rose 8.2%. The 6.6% YoY rise in core CPI is the most since 1982. OER had biggest monthly spike since 1990. The #Fed is losing its #inflation fight. Soon it will surrender."

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A recent Gallup survey found that inflation is causing economic hardship for 56% of Americans and various polls have revealed inflation to be a top issue heading into the 2022 midterm elections. 

Nick Timiraos, the Wall Street Journal's chief economics correspondent, predicted that persistent high inflation will force the Federal Reserve to continue raising interest rates. This raises the cost of borrowing money and reduces economic activity, bringing down prices. 

"For the Fed, the September CPI report seals the case for a fourth consecutive 75-basis-point hike. It calls into question the modal outlook from three weeks ago—that the Fed might be able to stop raising rates after 50 bps in December and 25 in February," Timiraos tweeted.

CEO of Compound Capital Advisors Charlie Bilello wrote, "Hiking rates to bring down inflation is not a ‘policy mistake,’ it's the Fed's mandate. The true policy mistake was believing that 0% rates, buying billions of mortgage bonds in a housing bubble, & increasing the money supply by 40% in 2 yrs would have no negative consequences."

INFLATION SURGED MORE THAN EXPECTED IN SEPTEMBER AS PRICES REMAIN STUBBORNLY HIGH

Federal Reserve Chair Jerome Powell testifies during a U.S. House Oversight and Reform Select Subcommittee hearing on Capitol Hill in Washington, U.S., June 22, 2021. Graeme Jennings/Pool via REUTERS

Stagflation, conditions under which both inflation and unemployment are high, is what the Federal Reserve is trying to avoid and would be a worse outcome for Americans than if the Fed is able to curb inflation. Critics of the Fed argue that it helped cause the record inflation Americans are experiencing through its large scale asset purchases and low interest rates. 

"The CPI rose +0.4% in September, and is now running at 8.2%, down from 8.3%. Excluding food and energy, prices rose +0.6% in the month, so core inflation is 6.6%. Inflation is proving to be more resilient -- and more troubling -- than many had hoped or forecast," Justin Wolfers, an economic professor at the University of Michigan tweeted.  

U.S. President Joe Biden (C) meets with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, in the Oval Office at the White House on May 31, 2022 in Washington, DC. The three met to discuss the Biden Administration's plan to combat record-high inflation. (Photo by Kevin Dietsch/Getty Images)

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The nonpartisan Congressional Budget Office reported in August that the Inflation Reduction Act will not reduce inflation.