The annual inflation rate in the US surged to 6.2% last month, hitting a three-decade high and above forecasts of 5.8%, the Labor Department reported Wednesday (Nov. 10).
Energy costs recording the biggest gain (30%), namely gasoline (49.6%). Inflation also increased for shelter (3.5%); food (5.3% the highest since January of 2009), namely food at home (5.4%); new vehicles (9.8%); used cars and trucks (26.4%); transportation services (4.5%); apparel (4.3% ); and medical care services (1.7%).
The annual rate of growth in core prices which excludes the often-volatile categories of food and energy, also accelerated to 4.6% from 4.0%, reflecting the biggest jump in prices since August of 1991.
On a monthly basis, the consumer-price index (CPI) which measures what consumers pay for goods and services, increased to 0.9% from 0.4% in September, also higher than forecasts of 0.6%, boosted by higher cost of energy, shelter, food, used cars and trucks, and new vehicles.
The data comes as the Federal Reserve restated its belief that current high inflation is “expected to be transitory” and related to Covid-specific issues. However, most economists are skeptical.
“The bottom line is that, while it remains difficult to predict how far or for how long the various ‘transitory’ factors will boost inflation, there is increasing evidence that inflationary pressures are broadening out, underlining that inflation will remain elevated for much longer than Fed officials expect,” economics forecaster Capital Economics wrote in a note to investors.
“The inflation overshoot will likely get worse before it gets better,” Goldman Sachs economists said in a research note Sunday.
Many companies have warned of increased cost pressures. In October some 53% of small businesses raised prices, on net—a level last seen in the early 1980s—the Wall Street Journal reported citing the National Federation of Independent Business.
Meanwhile, top executives at multiple blue-chip companies are warning that supply chain issues and inflation are here to stay.
“We are seeing commodity inflation across really every type of input cost that we have — agricultural commodities, petrochemical commodities, paper and board, transport, logistics, energy, labor — all are moving in an upward direction,” British consumer goods giant Unilever’s CEO Alan Jope told CNBC.
The sharp jump in the inflation rate is a dismal sign for the Biden administration. The U.S. president’s approval rating has fallen steadily since spring due in part to growing political backlash over higher food and gas prices, The Hill wrote.
As inflation is accelerating, it diminishing Americans’ confidence in the economy, surveys have found.