Inflation jumped 6.2 percent in October, the largest monthly rise in 30 years
Inflation accelerated in October, as Americans face a sharp rise in consumer prices as they approach the crucial holiday shopping season. This marks the highest monthly rise in nearly 30 years.
Consumer prices rose 6.2% from the same period last year, slightly faster than the 5.4% increase the previous month, according to the Bureau of Labor Statistics. She said Wednesday. Core inflation, which strips out volatile food and energy costs, rose 4.6% during the month.
Such rapid price increases send financial shocks through household budgets, nearly a decade later when inflation has risen between 1% to 2% annually. Americans are nervous about the country’s financial outlook, with more than 6 in 10 describing the economy as poor, according to a survey by the Associated Press-NORC Center for Public Affairs Research.
Rising inflation began in April, when the nation was beginning to emerge from a pandemic lockdown, and consumer demand for items such as cars, gasoline and furniture drove up prices. At the same time, many companies are struggling with labor shortages as well as crises in the supply chain, which make securing some products and services even more difficult.
After the latest data was released, Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted that “Grim and more to come.” “The basic story here remains a mixture of supply constraints, high labor costs, and reopening, although the latter is now a small part.”
Here are the main contributors to the rise in inflation last month, with prices rising in October year-on-year:
- Fuel oil: 59.1% increase
- Gasoline: 49.6%
- Gas services (by pipeline): 28.1%
- Used cars and trucks: 26.4%
- Beef: 20.1%
- Pork: 14.1%
- New cars: 9.8%
- Electricity: 6.5%
- Food: 5.3%
- Transportation services: 4.5%
- Clothing: 4.3%
- Shelter: 3.5%
In a statement on Wednesday, President Joe Biden said that taming inflation is “a top priority for me.” Pointing to rising energy costs as one of the main drivers of inflation, Mr. Biden said he is working to address it.
“I have directed my National Economic Council to pursue means to try to reduce these costs further, and have asked the Federal Trade Commission to respond to any market manipulation or price gouging in this sector,” Biden said. “Other price increases reflect the ongoing struggle to restore smooth operations in the economy at the start of the restart.”
“Transient” or not?
Meanwhile, the Fed has stuck to its characterization of high inflation this year as a “passing” issue. But economists are now predicting thatto pre-2021 levels over the next few months – and expect high prices to continue into 2022.
“Ongoing supply chain disruptions and supply/demand imbalances continue to drive inflation measures,” said Rubella Farooqi, chief US economist at High Frequency Economics, in a research note on Wednesday. “Overall, the 12-month changes are well beyond levels Fed officials are comfortable with, and today’s CPI data is unlikely to provide support for the ‘transient’ view.”
But Farooqi added: “Expectations remain that as the health crisis continues to recede, supply chains will adapt.”
Early this year, one of the biggest drivers of inflation was new cars – items that people don’t usually buy frequently. But the prices of goods purchased daily by most consumers are now rising, such as gas to fill their cars and steaks at the grocery store.
Moreover, rental prices accelerated in October, adding to the financial distress some consumers are feeling. Economists note that all of these issues could prompt the Fed to raise interest rates earlier than expected in an effort to curb consumer demand and tame inflation.
Kathy Bostancik, chief US financial economist at Oxford Economics, noted in a report released after inflation figures were released.