US consumer prices jumped 6.2 per cent in October compared with a year earlier, as the cost of food, gas, and housing all surged.
The year-over-year increase in the consumer price index exceeded the 5.4 per cent rise in September, the Labour Department reported on Wednesday. The Dow Jones estimate for October was 5.9 per cent.
From September to October, prices jumped 0.9 per cent, the highest month-over-month increase since June as the country continues to struggle with post-pandemic supply chain issues and labour shortages.
Stripping out volatile food and energy prices, annual core inflation ran at 4.6 per cent, the highest since August 1991.
Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen maintain that current price increases are temporary and are related to Covid-19 pandemic-specific issues. The policymakers concede that inflation is more persistent than they expected, but believe conditions will return to normal over the next year.
Calls are intensifying for the Fed to speed up its deliberations as to how fast to withdraw its efforts to boost the economy and help ease inflationary pressure, as negative pandemic impacts recede.
Any easing of inflationary pressure cannot come soon enough for the Biden administration and congressional Democrats. They are having to deal with the political headache inflation has caused by eroding otherwise strong gains in wages and salaries that have flowed to America’s workers in recent months.
Job gains and pay raises have been much healthier during the pandemic recovery than they were after the Great Recession just over a decade ago – in contrast with that period, by most measures the US economy has bounced back remarkably quickly.
However, accelerating inflation is diminishing Americans’ confidence, polls have found. President Joe Biden released a statement on Wednesday, acknowledging the problem.
“Inflation hurts Americans pocketbooks, and reversing this trend is a top priority for me,” he said. “The largest share of the increase in prices in this report is due to rising energy costs – and in the few days since the data for this report was collected, the price of natural gas has fallen.”
Mr Biden said that he has directed the National Economic Council to pursue means to try to further reduce these costs, and has asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector.
He added: “Other price increases reflect the ongoing struggle to restore smooth operations in the economy in the restart: I am travelling to Baltimore today to highlight how my Infrastructure Bill will bring down these costs, reduce these bottlenecks, and make goods more available and less costly. And I want to reemphasise my commitment to the independence of the federal reserve to monitor inflation, and take steps necessary to combat it.”
Mr Biden reiterated that 17 Nobel Prize winners in economics have said his Build Back Better plan will ease inflationary pressure and he called on Congress to pass it.
The president also touted some of the better economic news, that employment is rising fast.
“We have had six consecutive weeks of decline in new unemployment claims. The number of workers losing their jobs is at the lowest level since the pandemic began,” he said.
Initial claims for jobless benefits edged lower to 267,000, a new pandemic-era low, down 4,000 from the previous week. The total number receiving benefits under all programs fell by 107,095 to 2.56m, down from 21.7m a year ago.
“Unemployment claims are down 70 per cent since I took office. Unemployment has fallen so far this year at the fastest rate since the 1950s. It’s a jobs recovery that has happened years faster than after the Great Recession of 2008.”
He concluded: “We are making progress on our recovery. Jobs are up, wages are up, home values are up, personal debt is down, and unemployment is down. We have more work to do, but there is no question that the economy continues to recover and is in much better shape today than it was a year ago.”
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