Consumer prices rose nine tenths in a month, the Bureau of Labor Statistics reported Wednesday.
The year-on-year rate of inflation in the United States soared in October to 6.2%, the highest record for consumer prices in this country since 1990, amid strong consumer demand and problems in global supply chains after the crisis caused by the pandemic.
Consumer prices rose nine tenths in a month, the Bureau of Labor Statistics reported Wednesday.
This is the fifth consecutive month in which year-on-year inflation has been above 5% in the US.
Last month’s data is of particular concern, as it shows a more general rise than in previous months, which had focused on specific sectors.
If food and fuel prices, which are the most volatile, are excluded, core inflation in October was 0.6%, with an annual rate of 4.6%.
Energy prices rose 4.8% in October and food prices rose 0.9%, according to the government report.
Specifically, the prices consumers pay for gasoline rose 6.1% last month and have risen 49.6% in one year.
For Jason Furman, Harvard economics professor and researcher at the Peterson Institute for International Economics, the 0.9% monthly price rise in October is an “extremely high indicator.”
“In addition, inflation is spreading (…) It has been a big jump even if we exclude cars and services affected by the pandemic,” he said on his Twitter account.
Pressure on the Fed
This Wednesday’s data adds pressure to the US central bank, which has already announced that it will begin to gradually reduce from this month the multimillion-dollar bond purchase program launched to support the economy after the crisis caused by the pandemic.
Last week the Fed left interest rates unchanged in the range between 0% and 0.25% and announced the beginning of the reduction of liquidity injections by 15,000 million dollars per month.
With this decision, the volume of monthly bond purchases, currently at 120,000 million dollars, would be progressively reduced with the aim of completely ending the program by mid-2022.
“If inflation does not decrease, the Federal Reserve may need to reduce its bond purchase program at a more substantial rate and raise interest rates, which could damage financial assets,” warned Nancy Davis, director of the investment fund Quadratic Capital Management.
Despite conceding that it is more persistent than anticipated a few months ago, Fed Chairman Jerome Powell stressed last week that he continues to think that high inflation is due to factors that are “transitory”, such as problems in supply chains. global supply and “strong demand”.
Thus, he considered that the “engines” of this higher inflation are directly “connected with the changes caused by the pandemic” and stressed that he does not see inflationary pressures on wages.
Therefore, he estimated that the rise in prices will begin “to moderate in the second or third quarter of 2022.”
In September, the Fed lowered its economic growth forecasts to 5.9% this year, compared to the 7% estimated three months ago; while it slightly raised inflation rates from 3.4% to 4.2% by the end of 2021.
The US central bank is scheduled to hold its last monetary policy meeting of the year on December 14-15. (I)
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