Economy|Business and Economy
Inflation: US consumer prices surge at fastest rate in 30 years
American consumers shelled out a lot more for basic essentials last month like food, fuel, and shelter, as inflation in the world’s largest economy continues to surge.
US gasoline prices vaulted 6.1 percent in October on a monthly basis and nearly 50 percent from the same period a year ago [File: Jenny Sathngam/Bloomberg]
By Al Jazeera Staff
10 Nov 2021
How much higher will prices climb?
For months now, blistering inflation has been a hallmark of this year’s global economic rebound from last year’s COVID-19 blow. And in the United States – the world’s largest economy – price pressures continue to accelerate at a pace not seen for three decades.
US consumer prices jumped a blistering 6.2 percent in October from the same period a year ago, the US Department of Labor said on Wednesday. That is the fastest pace since 1990 and blew past many analysts’ already dour inflation estimates.
On a monthly basis, the Consumer Price Index (CPI) increased 0.9 percent in October, after rising 0.4 percent in September.
Supply chain bottlenecks and shortages of raw materials and workers are driving prices ever higher for US businesses, which in turn are increasingly passing those increased input costs onto American consumers.
That matters deeply to the health of the US economy given two-thirds of its growth is driven by consumer spending.
So far, the steward of the US economy, the Federal Reserve, has been unconcerned about this year’s rise in inflation, insisting that price pressures will prove temporary and eventually ease down.
The Fed has decided to start dialling back bond purchases which have helped buoy the economy during the pandemic. But it said that should not be taken as a signal that it is ready to raise interest rates  – the sharpest tool at its disposal for reining in inflation – any time soon.
US consumers meanwhile are bracing for more pain in their wallets, with the most recent monthly survey of consumer expectations by the New York Fed showing median inflation expectations for the coming year have hit an all-time high.
Consumers often react to rising prices by swapping out more expensive brands for less pricey ones or simply going without goods and services they can put off buying until a later date, when sticker shock may have eased.
Some purchases, though, cannot be delayed – like food, fuel, and shelter. This is why inflation hits low-income households especially hard because they shell out a larger share of their modest incomes to cover the necessities.
October’s consumer inflation surge was led by energy, with prices jumping 4.8 percent from the month before and 30 percent over the past twelve months.
Within the energy category, gasoline prices vaulted 6.1 percent in October on a monthly basis and nearly 50 percent from the same period a year ago.
Food prices climbed 0.9 percent in October after rising 0.4 percent in September, while shelter prices jumped 0.5 percent last month.
The so-called core CPI, which strips out food and energy, rose 0.6 percent in October from the month before, driven in large part by higher vehicle costs thanks to a shortage of semiconductors that have weighed on car and truck production and made used cars a whole lot more expensive.
Higher housing rents also drove core CPI higher.
“The biggest concern for the Fed should be signs that longer-lasting cyclical inflation pressures are continuing to build rapidly, with CPI rent of primary residence and owners’ equivalent rent both posting strong gains of 0.4% m/m,” said Andrew Hunter, senior US economist at Capital Economics in a note to clients. “As the improving labour market and prior gains in house prices continue to feed through, a further acceleration in shelter inflation looks nailed on.”
The effect of workers’ shortages on consumer prices was evident in the “food away from home” category of CPI. That rose 0.8 percent in October, reflecting this year’s sharp rise in wages for workers in customer-facing leisure and hospitality jobs.
But this year’s pay bumps are not keeping up with inflation, leaving many households on the back foot where rising prices are concerned.
Last month, average hourly wages were 4.9 percent higher than the same period a year ago.
US labour mar­ket picks up in Oc­to­ber with 531,000 jobs added
Though hir­ing picked up in Oc­to­ber, short­ages of work­ers and raw ma­te­ri­als are still weigh­ing on the US econ­o­my.
5 Nov 2021
In­fla­tion watch: Glob­al food prices hit 10-year high
Glob­al food prices climb for a third straight month, heap­ing more pain on house­holds, es­pe­cial­ly poor­er ones.
4 Nov 2021
US con­sumers ex­pect in­fla­tion and their fi­nances to wors­en
NY Fed month­ly sur­vey found in­fla­tion ex­pec­ta­tions for the next year have hit a new all-time high.
8 Nov 2021
In­fla­tion: US whole­sale prices hit record high in Oc­to­ber
High­er US pro­duc­er prices per­sist­ed in Oc­to­ber, as bot­tle­necks and short­ages con­tin­ued to fuel in­fla­tion.
9 Nov 2021
India’s dependence on imported cooking oil to continue
Indian women are storming the gates of the investor ‘boys club’
Australian PM’s WeChat account hijacked and renamed
How a billionaire’s cruise empire imploded in Hong Kong
Burkina Faso President Kabore ‘detained’ by mutinous soldiers
Houthi missiles target Saudi Arabia and UAE as escalation grows
Giant chessboard: Istanbul ship-spotters monitor moves for war
US orders families of Ukraine embassy staff to leave on war fears
Follow Al Jazeera English:
© 2022 Al Jazeera Media Network
You rely on Al Jazeera for truth and transparency
We understand that your online privacy is very important and consenting to our collection of some personal information takes great trust. We ask for this consent because it allows Al Jazeera to provide an experience that truly gives a voice to the voiceless. You have the option to decline the cookies we automatically place on your browser but allowing Al Jazeera and our trusted partners to use cookies or similar technologies helps us improve our content and offerings to you. You can change your privacy preferences at any time by selecting ‘Cookie preferences’ at the bottom of your screen.To learn more, please view our Cookie Policy.