The inflation rate rises as CPI data show that prices rose 6.8% in November
Inflation peaked in 39 years in November when an economy still struggling with the effects of the COVID-19 pandemic drove strong consumer demand along with persistent supply chain tightening and labor shortages.
The consumer price index jumped 6.8% from the previous year, the fastest pace since 1982, when prices rose for staples such as food and petrol, as well as new and used cars, rent and medical services, the Ministry of Labor said on Friday.
Excluding volatile food and energy products, so-called core prices rose by 4.9% annually, a new 30-year high.
On a monthly basis, total consumer prices increased 0.8% in November, while core prices rose 0.5%.
Although wages are also rising as a result of labor shortages, they are not keeping pace with high prices and are pushing lower-income households.
“Not since the release of (Michael Jackson̵[ads1]7;s) Thriller has inflationary pressures been so strong in the United States,” TD Economics wrote in a note to customers.
►Why is inflation so high ?:The causes and solutions are complicated
►How does inflation affect you ?:Rising prices for gas, food and energy are a cause for concern
Profit below inflation ?:These 5 tips can help investors beat rising prices
Last month, prices rose by 6.4% annually for groceries, with a jump of 13.9% for beef, 16.8% for pork, 8.4% for chicken and 8% for fish.
Gasoline prices rose 58.1% last year, rising 6.1% monthly in November.
Prices for used cars and trucks increased by 31.4% from a year ago, and costs for new vehicles increased by 11.1% as the industry continues to struggle with a chip shortage that limits the production of new vehicles.
Rents increased by 3% and hotel prices rose by 22.2%, rising by almost 3% last month. Prices rose 11.8% for furniture and bedding, and 5% for both white goods and clothing.
A recent drop in crude oil prices should filter through to pump up costs and probably means that total inflation has reached its peak and should cool somewhat in December, says economist Bill Adams from PNC Financial Services Group.
But core inflation must continue to rise further, says Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Kathy Bostjancic, chief economist at Oxford Economics, expects inflation to remain high through early 2022 before supply and demand balance out and inflation softens significantly in the second half of next year.
After weakening below normal levels for most of the last decade, inflation has risen since the spring as covid vaccinations increased and the economy reopened after last year’s government-ordered closures.
Consumers who already bought goods such as TVs and appliances while stuck at home during the health crisis began to eat out and travel more. Many were ready to pay out after building up more than $ 2.5 trillion in additional savings from federal stimulus checks and improved unemployment benefits, as well as cutting back during the shutdowns.
But a supply network still hampered by the pandemic was not prepared for the buying stage. Many foreign factories operate with partial capacity. Shipping containers are in short supply. And many truck drivers and warehouse workers still take care of their children at home or are afraid of getting COVID.
The rare collision between robust demand and scarce supplies has triggered extensive product shortages and higher prices just when the Christmas shopping season shifts to high gear.
Meanwhile, hotels, restaurants and shops are also struggling to hire workers, which is pushing up wages sharply and forcing outlets to raise prices further.
Although price increases were initially largely limited to covid-related products and services, such as cars, air fares, hotels, they have expanded to include a wide range of goods, including food, rent and petrol.
Republicans in Congress have largely blamed President Biden for inflation, pointing to the US $ 1.9 trillion rescue plan earlier this year that further boosted consumer demand with $ 1,400 stimulus checks for most individuals and the renewal of improved unemployment benefits.
Many economists mainly point to the supply bottlenecks and say that inflation should decrease considerably as the cracks are resolved by the second half of 2022.
In an effort to reduce rising prices if they do not fall soon, the Federal Reserve is expected next week to accelerate the phasing out of the stimulus for bond purchases, a move that will pave the way for interest rate hikes as early as the spring. .
Inflation beats consumer sentiment:Poll: One-third of Americans view inflation and bills as their biggest concern, ahead of COVID
