WASHINGTON, Nov 10 (Businesshala) – U.S. consumer prices rose more than expected in October as gasoline and food costs rose, leading to the biggest annual gains since 1990, further indicating that inflation will remain uneasy for the next year. can be maintained at a higher level. supply chains.
The Labor Department said on Wednesday that the consumer price index rose 0.9% last month after rising 0.4% in September. In the 12 months to October, the CPI gained 6.2%. This was the biggest year-on-year advance since November 1990 and followed a 5.4% jump in September.
Excluding volatile food and energy components, the CPI rose 0.6% after climbing 0.2% in September. The so-called core CPI jumped 4.6% on a year-on-year basis, the biggest increase since August 1991, after holding steady at 4.0% for two consecutive months. Economists polled by Businesshala had forecast an increase of 0.6% in the overall CPI and 0.4% in the core CPI.
Inflation is heating up again as the economic drag, fade and supply bottlenecks persist from the heat wave of COVID-19 infections, driven by the delta version. Trillions of dollars in pandemic relief from governments around the world boosted demand for the goods, crippling supply chains.
The nearly two-year-long pandemic has rattled labor markets, leading to a global shortage of workers needed to produce raw materials and move goods from factories to consumers. Producer prices rose strongly in October, reversing a slowing trend in the monthly PPI, which had been stuck since spring, the government said on Tuesday.
Although the Federal Reserve reinstated its belief last week that current high inflation is “expected to be transient”, most economists are skeptical, noting also that wages are rising strongly as companies scramble for workers.
“Supply disruptions and the services recovery are a major concern that higher-than-expected inflation could persist longer than the Fed believes,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
“We expect goods inflation to hand the baton to services over the course of the next year, but all indications indicate that supply chain disruptions will continue to fan the flames over inflation in the near term.”
The Fed this month began reducing the amount it invests in the economy through monthly bond purchases. The US central bank’s preferred inflation measure for its flexible 2% target rose 3.6% year-on-year in September.
Oil prices are rising on the back of a recovery in the global economy. Brent crude has gained over 60 per cent this year. The US Energy Information Administration on Tuesday forecast a slight increase in gasoline prices for 2021 and 2022 compared to last month’s forecast in its latest short-term energy outlook.
Petrol prices are at a seven-year high.
Companies are laying off their employees due to labor shortage. In another report on Wednesday, the Labor Department said initial claims for state unemployment benefits fell by 4,000 to a seasonally adjusted 267,000 for the week ended November.
It was the lowest level since mid-March in 2020, when the economy nearly came to a halt due to mandatory business closures aimed at slowing the first wave of COVID-19 infections. The claims, which have now dropped for six straight weeks, are well within their pre-pandemic levels.
The report was published a day earlier as the federal government closed Thursday for the Veterans Day holiday.
The government reported last Friday that the economy added 531,000 jobs in October, with the annual wage increase being the biggest in eight months. The labor force is 3 million below 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 that initial claims may fall below their pre-COVID levels,” said Veronica Clarke, economist at Citigroup in New York.
“Of course, there is still some upside risk for claims due to layoffs related to the vaccine mandate, but these workers may not qualify for unemployment benefits because of violating company policies.”
In the context of the White House’s vaccine mandate, employees of companies with 100 or more employees are required to be fully vaccinated by January 4. (Reporting by Lucia Muticani; Editing by Dan Burns)