Inflation soars to its highest level in 40 YEARS as prices jump 6.8% – ‘Bidenflation’ socks consumers with the biggest jump since Reagan administration
The US inflation rate has hit its highest level in nearly 40 years, adding woes for consumers and compounding the issue as a political liability for President Joe Biden.
The consumer price index rose 0.8 percent last month after surging 0.9 percent in October, the Labor Department said on Friday.
It pushed annual inflation to 6.8 percent in November, the highest increase since June 1982 and well above October’s 6.2 percent annual rate.
U.S. stock futures edged higher and oil rallied on Friday ahead of the U.S. inflation data, although the mood was wary after a bumper week for many risky assets.
The consumer price index rose 6.8 percent in November from a year ago, up from October’s gain of 6.2 percent and the biggest annual gain since 1982
World stocks were on course for their best week since March 2021 and oil for its biggest weekly gain since late August, helped by signs the Omicron coronavirus variant might not be as economically disruptive as feared.
Excluding the volatile food and energy components, the CPI rose 0.5 percent last month after gaining 0.6 percent in October. The so-called core CPI jumped 4.9 percent on a year-on-year basis after increasing 4.6 percent in October.
‘A continued trend higher in core inflation creates further hawkish risks for a Fed that has recently become more focused on the inflation side of its mandate, and suggests a rising likelihood of an even earlier first rate hike,’ said Veronica Clark, an economist at Citigroup in New York.
The report followed on the heels of news last week that the unemployment rate fell to a 21-month low of 4.2 percent in November.
Tightening labor market conditions were underscored by a report on Thursday showing new applications for unemployment benefits dropped to the lowest level in more than 52-years last week.
A customer shops in the prepared food section of the Trader Joe’s Upper East Side Bridgemarket grocery store in New York on December 2
Other data this week showed there were 11 million job openings at the end of October and Americans quit jobs at near-record rates.
The tight labor market is boosting wages and supply bottlenecks are showing little sign of easing, indicating that high inflation could persist well into 2020.
‘With supply shortages likely to stick around until next year and service-sector prices trending higher, inflation is going to get worse before it gets better,’ said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
Fed Chair Jerome Powell has said the U.S. central bank should consider speeding up the winding down of its massive bond purchases at its policy meeting next Tuesday and Wednesday. Many economists are expecting an early Fed interest rate increase.
The Fed tracks the alternative personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, for its flexible 2 percent inflation target.
The core PCE price index surged 4.1 percent in the 12 months through October, the most since January 1991. November data will be released later this month.
Developing story, more to follow.
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