In October, U.S. consumer prices increased more than expected as the cost of gasoline and food surged, leading to the biggest annual gain since 1990, a further signs that inflation could remain uncomfortably high in next year amid scarred global supply chains.
The labor department said on Wednesday that the consumer price index rose 0.9% last month after gaining 0.4% in September. The CPI increased by 6.2% in the 12 months through October. The largest year-on - year advance since November 1990 followed a 5.4% jump in September.
The CPI gained 0.6% after a decline in September due to the volatile food and energy components. The core CPI jumped 4.6% on a year-on - year basis, which is the largest increase since August 1991, after it remained at 4.0% for two straight months. The overall CPI shooting up 0.6%, and the core CPI rising 0.4%, according to economists polled by Reuters.
Inflation is heating up again as the economic drag from the summer wave of COVID-19 infections, driven by the Delta variant, fades and supply bottlenecks continues. Trillions of dollars in pandemic relief from governments across the world fueled demand for goods, leaving supply chains overstretched.
The world shortage of workers needing to produce raw materials and move goods from factories to consumers has been caused by the two-year long epidemic, causing a global need for workers to produce raw materials and move goods from factories to consumers. The government reported on Tuesday that producer prices increased in October, reversing a slowing trend in the PPI that had become entrenched since spring.
Though the Federal Reserve last week restated its belief that current high inflation is expected to be transitory, most economists are skeptical, also noting that wages are rising strongly as companies scramble for workers.
A senior economist at Wells Fargo, Charlotte, North Carolina, said Sam Bullard, a senior economist, who said supply disruptions and the recovery of services could continue for a long time, as inflation could continue for longer than expected, said higher- than expected inflation, said Sam Bullard, a senior economist at Wells Fargo.
We expect goods inflation to give the baton to services over the next year, but all signs show that supply chain bottlenecks will keep tinging the flames on inflation in the near term. The Fed has reduced the amount of money it is injecting into the economy through monthly bond purchases this month. The U.S. central bank's preferred inflation measure for its flexible 2% target increased by 3.6% year-on-year in September.
oil prices are boosted by a recovering global economy. This year, Brent crude has gained over 70%. The US Energy Information Administration projected a small increase in gasoline prices for 2021 and 2022 in its Short term Energy Outlook, compared to its forecasts last month.
With labor scarce, companies are holding on to their workers. In a report on 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.
The economy almost ground to a halt under the onslaught of mandatory business closures that were used to slow the first wave of COVID-19 infections. Claims, which have declined for six weeks, are within a striking distance of their pre-pandemic level.
The report was published a day early because the federal government is closed on Thursday for the Veterans Day holiday.
The economy in October added 531,000 jobs, with a degree of annual wage growth the largest in eight months, according to the government. The labor force is down 3 million from its pre-pandemic level, making it harder to fill the 10.4 million job openings as of August.
In the current environment it is not unreasonable to think initial claims can fall below their pre- COVID levels, according to Veronica Clark, an economist at Citigroup in New York.
Of course, there are still some upside risks to claims due to layoffs related to vaccine mandates, but these workers might not qualify for unemployment benefits due to violating company policies. In terms of the White House's vaccine mandate, workers at companies with 100 or more employees are required to be vaccinated by Jan. 4.
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