US Inflation Hits 30-Year Highest Annual Rate in October – Quartz

U.S. consumer prices rose at the fastest pace in 30 years in October, as pandemic-related supply chain issues and growing demand pushed up prices for everything from gasoline to homes, 6.2% over last year.

After slowing for three months, inflation is accelerating again, fueling fears that prices are spiraling out of control and halting the US recovery. Compared to September, inflation jumped 0.9% in October, a rate not seen since June.

At the time, only one element, used cars, was largely responsible for the increase in the overall rate. This time around, prices for almost everything have risen, with energy in particular accounting for a large part of the monthly rise. The widespread increases will impact more Americans, but like the spike in used-car prices, they’re the result of temporary disruptions that most observers say should fade.

Why were prices higher in October?

The jump in energy prices, which rose 4.8% during the month, was mainly attributable to a 12.3% increase in fuel oil (used to heat, cook and power household appliances) caused by the decline in inventory. Meanwhile, more expensive beef helped push food prices up 0.9%. Excluding food and energy, prices rose by 0.6% over the month.

The cost of housing, which represents more than a third of the index, remained high, with rents increasing by 0.4% over the month. Even when building materials, including lumber, cooled over the summer, price increases for other home supplies, such as garage parts and microwaves, kept home prices down. houses at a high level.

Inflation for these items should slow as supply normalizes. This is what happened with used car prices. In June, car rental companies, normally big sellers of cars, were instead on the buyer’s side to replenish fleets they had sold off a year earlier due to the pandemic. Meanwhile, a shortage of semiconductors has reduced the supply of new cars. But as those problems eased, prices fell. (The recent supply chain crisis is once again driving up prices for used cars and trucks.)

Energy is now suffering from a similar problem of supply-side inflation as oil-producing countries struggle to replenish their fuel stocks amid rebounding consumer demand. The issue is leading US President Joe Biden to consider releasing oil from the country’s emergency stockpile.

But the rise in the inflation rate is unlikely to deflect the Federal Reserve from its path of holding interest rates until the labor market recovery is firmer. The central bank said it expects supply constraints to ease until mid-2022.

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