US Consumer Prices Rise and Unemployment Benefit Claims Fall

Consumer prices in the United States rose more than expected in October on the back of gasoline and food hikes, the biggest annual increase since 1990, and a new sign that inflation could remain uncomfortably high until well. entered next year.

The consumer price index rose 0.9% in October, after 0.4% in September, the Labor Department reported Wednesday. In the 12 months through October, the CPI accelerated to 6.2%. This is the highest year-on-year advance since November 1990 and follows the 5.4% of the previous month.

If the volatile components of food and energy are excluded, the CPI rose 0.6%, after having done so 0.2% in September. The so-called core CPI rose 4.6% in year-on-year terms, the largest increase since August 1991, after having remained at 4% for two consecutive months.

Economists polled by Reuters had predicted that the IPC general rose 0.6% and the underlying 0.4%.

Inflation is picking up again as the economic drag from the summer wave of COVID-19 infections wears off, driven by the variant Delta, and supply bottlenecks persist.

Billions of dollars of pandemic aid from governments around the world fueled demand for goods, leaving supply chains overstretched.

The pandemic, which has lasted for almost two years, disrupted labor markets, causing a global shortage of workers needed to produce raw materials and move goods from factories to consumers.

The government reported Tuesday that producer prices in the United States rose sharply in October, reversing a deceleration trend in the monthly PPI that had taken hold since the spring.

While the Federal Reserve last week reaffirmed its belief that “(current inflation) is expected to be transitory”, Most economists are skeptical, and also point out that wages are rising sharply because companies are fighting over workers.

“Supply disruptions and recovery in services raise substantial concerns that higher-than-forecast inflation may persist longer than the Fed believes“, said Sam Bullard, senior economist at Wells Fargo in Charlotte, North Carolina.

“We expect inflation in goods to give way to services over the course of the next year, but all indications are that supply chain bottlenecks will continue to stoke the fire of inflation in the short term.”He added.

The Federal Reserve began this month to reduce the amount of money it injects into the economy through monthly bond purchases. The inflation measure preferred by the US central bank for its flexible 2% target increased to 3.6% year-on-year in September.

The recovery in the world economy is driving up oil prices. Brent crude is up more than 60% this year.

The U.S. Energy Information Administration on Tuesday projected a small increase in gasoline prices for 2021 and 2022 in its latest Short-Term Energy Outlook, compared to its forecast last month.

In the face of labor shortages, companies hold on to their workers. In another report Wednesday, the Labor Department said initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 267,000 for the week ended Nov. 6.

This is the lowest level since mid-March 2020, when the economy came to a halt under the onslaught of lockdowns and business closures aimed at curbing the first wave of COVID-19 infections.

Still, claims for reimbursement, which have been declining for six consecutive weeks, are a considerable distance from their pre-pandemic level.

The report was released a day earlier because the federal government will be closed on Thursday for the Veterans Day holiday.