Inflation rate in the US reaches 6.8%, something not seen in almost 40 years

The interannual rate of inflation in the United States rose in November to 6.8% -six tenths above that of October-, which represents the highest record of consumer prices in this country in almost 40 years and redoubles the pressure on the Federal Reserve to take containment measures.

Consumer prices rose eight tenths in a month, according to the United States Bureau of Labor Statistics.

6.8% represents the highest year-on-year inflation figure since June 1982, at the end of the great inflationary period of the 1970s in the US, which was caused by runaway oil prices.

The November data was even above the predictions of most analysts, who expected a rate higher than 6% but without reaching 7% as has been the case.

If food and fuel prices, which are the most volatile, are excluded, underlying inflation in October was 0.5%, with an annual rate of 4.9%.

Energy prices rose 3.5% in October and food prices rose 0.7%, according to the government report.

Specifically, the prices consumers pay for gasoline increased 6.1% last month and have risen 58.1% in one year.

This Friday’s data adds pressure to the Federal Reserve (Fed, which is responsible for dictating US monetary policy), which has a dual mandate to promote full employment and price stability.

A soaring inflation like the one reflected in the data known today could lead those responsible for the US central bank to accelerate the pace or the amount of the withdrawal of stimuli.

“The high inflation that the US is experiencing has two main culprits: the financial stimulus policy implemented over the past year and a half to respond to the COVID-19 crisis and the labor shortage”Said Duke University economics professor Connel Fullenkamp.

In the opinion of Fullenkamp – who maintains the hope that high prices are a temporary phenomenon – high inflation will not fall until the effects of the stimulus policies wear off and all the workers who have left the labor market in recent months will return. to look for a job.

In November, 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 US $ 15,000 million per month.

In recent weeks, various US financial media have speculated that after its meeting next week, the US central bank will announce that it will double the amount of the reduction of these liquidity injections, so that Instead of withdrawing 15,000 million a month, it would withdraw 30,000.

Although the Fed has not yet ruled on the matter, the high rate of inflation released today reinforces the arguments of those who advocate such a decision.

In the medium term, the objective of the central bank is to progressively reduce the volume of monthly bond purchases – set at US $ 120,000 million throughout the crisis – until it comes to an end at some point in 2022, and then proceed to an increase of interest rates.

The Federal Reserve is scheduled to hold its last monetary policy meeting of the year on December 14-15 (Tuesday and Wednesday of next week).