The data backs it up: it is becoming more and more expensive to live in the United States. In October, prices paid by consumers reached their highest point in the last 30 years, beating all forecasts.
The Consumer Price Index (CPI) of the world’s largest economy it increased 0.9% in October and in 12 months the jump made by the indicator was 6.2%.
The figures released this Thursday by the Labor Department left the respective estimates short of 0.6% and 5.9% that the market had made. They also surpassed with strength 0.4% and 5.4% reported in September.
By excluding volatile food and energy prices, the so-called core CPI rose 0.6% monthly. The increase in the last year of the indicator was 6.2%, crushing the 4% projected by analysts, and crowning itself as the peak since November 1990.
Along with supply chain disruptions and a shortage of workers, inflation has become one of the biggest concerns for both the Federal Reserve – which just announced that in order to month will begin to reduce its monthly purchase of US $ 120,000 million- and from the White House, which is expected to name in the coming weeks who will lead the Fed for the next four years.
One more time, energy, used cars and food drove prices up. Oil costs jumped 12.3% between September and October, while in the last year the increase was an unprecedented 59.1%. The cost of energy increased 4.8% last month and 30% since October 2020.
Used cars are now 2.5% more expensive than in September and 26.4% more than a year ago, while new ones increased in cost by 1.4% and 9.8% respectively. Food prices rose 0.9% in one month and 5.3% in twelve. Housing – which represents a third of the CPI – increased its costs by 0.5% in the last month and 3.5% in one year.
And the Fed?
The monetary authorities, including the president of the Fed, Jerome Powell, have recognized that inflationary pressures have been more persistent than expected, and that they are willing to use all the entity’s tools if they are needed. But, they continue to defend that this will finally be transitory and that it will return to the central bank’s 2% target levels.
Andrew Hunter, senior US economist at Capital Economics, seems to disagree. After knowing the data, he wrote that “while it remains difficult to predict to what extent or for how long the various ‘transitory’ factors will drive inflation, there is growing evidence that inflationary pressures are widening, underscoring that the inflation will stay high for much longer than Fed officials expect. “
The economist argued that the October indicator “illustrates that upward pressure from supply shortages remains intense and that even when those effects finally fade, rising cyclical pressures are likely to keep inflation unusually high.”
From Oxford Economics, Kathy Bostjancic and Gregory Daco argued that strong demand and tight supply will drive higher inflation in early 2022, which they say could lead the Fed to raise rates ahead of its December forecast. Next year.