Inflation picked up again in October, with the PCE index up 5 percent
A key measure of inflation showed consumer prices rising at the fastest pace in three decades as energy prices and demand for goods and services rose, challenging both the White House and the Federal Reserve.
Prices rose 5 percent in the 12 months through October, according to the Personal Consumption Expenditure Price Index Data released Wednesday. That was the fastest pace of increase since 1990.
The scale was raised by a 30.2 percent annual increase in energy prices and a 4.8 percent increase in food prices. Prices rose 0.6 percent from September to October, as supply chain disruptions continued to limit availability of some products and components.
The increases were in line with what analysts had expected, but a rise in the Fed’s preferred inflation measure will only add pressure on the central bank To take faster action to maintain price stability.
The price increases showed few signs of fading, as some officials in the Biden administration and at the Federal Reserve argued they would earlier this year. The central bank is facing mounting calls to speed up plans to end its stimulus bond-buying program and start raising interest rates, a process that could risk slowing job gains and economic growth.
While inflation has soured consumer sentiment and weighed on Mr. Biden’s valuations, these price increases have been driven in part by a strong economic recovery. Separate data released by the Ministry of Labor on Wednesday found that Initial jobless claims fell to an all-time low Since 1969, it has fallen by 71,000 to 199,000 last week.
Mr. Biden praised the drop in unemployment claims on Wednesday but acknowledged that the country is still far from a full recovery and that it must tackle rising inflation.
“We have more work to do before our economy returns to normal, including addressing price hikes that hurt Americans’ money and undermine gains in wages and disposable income,” Biden said in a statement Wednesday.
In an effort to lower gas prices, the United States and five other world powers announced coordinated efforts on Tuesday Benefit from national oil stocks. Mr. Biden has ordered the Department of Energy to release 50 million barrels of crude oil in Iraq Strategic Petroleum ReserveThis is less than what traders expected from the emergency stockpile, which is the largest in the world with 620 million barrels.
Consumers are increasingly concerned about the sharp rise in prices. A University of Michigan survey on Wednesday showed that consumers expressed less optimism in November than at any other time in the past decade about the prospects for their finances and the overall growth of the economy. The decline in consumer sentiment came as a result of the rapid increase in inflation and the lack of federal policies that would remedy the damage to household budgets, according to the report.