US consumer prices rise at fastest pace since 1990
Higher prices for energy, shelter, food and vehicles fuel the reading and show inflation is broadening
10 November 2021 - 17:31
byOlivia Rockeman
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US consumer prices rose in October at the fastest annual pace since 1990, cementing high inflation as a hallmark of the pandemic recovery and eroding spending power even as wages surge.
The consumer price index (CPI) increased 6.2% from October 2020, according to labor department data released Wednesday. The CPI rose 0.9% from September, the largest gain in four months. Both advances exceeded all estimates in a Bloomberg survey of economists.
Higher prices for energy, shelter, food and vehicles fuelled the supercharged reading and indicated inflation is broadening out beyond categories associated with reopening.
Stocks opened lower, while the yield on the 10-year Treasury rose and the dollar strengthened.
Against a backdrop of solid demand, businesses have been steadily raising prices for consumer goods and services at the same time supply chain bottlenecks and a shortage of qualified workers drive up costs.
Fed pressure
The pickup suggests higher inflation will be longer-lasting than previously thought, putting pressure on Federal Reserve officials to end near-zero interest rates sooner than expected and potentially to quicken the pace of the bond-buying taper announced last week.
The data also threaten to worsen political challenges for President Joe Biden and Democrats as they seek to pass a nearly $2-trillion tax-and-spending package and defend razor-thin congressional majorities in next year’s midterm elections.
A report on Tuesday showed prices paid to US producers also accelerated in October, largely due to higher goods costs, and adding to concerns about persistent price pressures across the globe.
In China, inflation at the factory level in October increased by the most in 26 years, while consumer prices in Brazil sped up by more than forecast.
https://www.youtube.com/user/BusinessDayLive
Excluding the volatile food and energy components, so-called core inflation rose 0.6% from the prior month and 4.2% from a year earlier. The annual increase was the largest since 1991.
Shelter costs — which are considered to be a more structural component of the CPI and make up about a third of the overall index — rose 0.5% in October, the most in four months as higher rents and home prices feed into the data. The cost of hotel stays increased.
Prices for new cars rose 1.4% in October as a global shortage of semiconductors continues to limit inventories and drive up costs. Used-vehicle prices jumped 2.5%.
Americans are also facing higher costs for basic necessities: Food was up 5.3% from year ago, the most since January 2009; fuel rose 6.1% from September, the biggest gain since March; electricity costs jumped 1.8%, the largest monthly increase since 2014; and fuel oil advanced 12.3% from prior month, the most since 2007.
“Higher energy prices, intensification of supply-chain bottlenecks and higher rents all pushed up prices briskly in the consumer basket,” Bloomberg Economics’ Anna Wong and Andrew Husby said in a note. Looking ahead, “those factors and adverse base effects should keep the headline CPI from peaking until January”.
“We haven’t seen, I’ll say, any more resistance to our price increases than we’ve seen historically,” said McDonald’s CFO Kevin Ozan in an October 27 earnings call.
Meanwhile, Procter & Gamble CFO Andre Schulten said on October 19: “We have now announced pricing in nine out of ten categories, so very broad based.”
While most CPI categories rose, the cost of airfares declined for a fourth month and apparel prices were unchanged.
Wages have strengthened markedly in recent months — with some measures rising by the most on record — but higher consumer prices are eroding Americans’ buying power.
Inflation-adjusted average hourly earnings fell 1.2% in October from a year earlier, separate data showed on Wednesday.
Bloomberg News. More stories like this are available on bloomberg.com
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US consumer prices rise at fastest pace since 1990
Higher prices for energy, shelter, food and vehicles fuel the reading and show inflation is broadening
US consumer prices rose in October at the fastest annual pace since 1990, cementing high inflation as a hallmark of the pandemic recovery and eroding spending power even as wages surge.
The consumer price index (CPI) increased 6.2% from October 2020, according to labor department data released Wednesday. The CPI rose 0.9% from September, the largest gain in four months. Both advances exceeded all estimates in a Bloomberg survey of economists.
Higher prices for energy, shelter, food and vehicles fuelled the supercharged reading and indicated inflation is broadening out beyond categories associated with reopening.
Stocks opened lower, while the yield on the 10-year Treasury rose and the dollar strengthened.
Against a backdrop of solid demand, businesses have been steadily raising prices for consumer goods and services at the same time supply chain bottlenecks and a shortage of qualified workers drive up costs.
Fed pressure
The pickup suggests higher inflation will be longer-lasting than previously thought, putting pressure on Federal Reserve officials to end near-zero interest rates sooner than expected and potentially to quicken the pace of the bond-buying taper announced last week.
The data also threaten to worsen political challenges for President Joe Biden and Democrats as they seek to pass a nearly $2-trillion tax-and-spending package and defend razor-thin congressional majorities in next year’s midterm elections.
A report on Tuesday showed prices paid to US producers also accelerated in October, largely due to higher goods costs, and adding to concerns about persistent price pressures across the globe.
In China, inflation at the factory level in October increased by the most in 26 years, while consumer prices in Brazil sped up by more than forecast.
https://www.youtube.com/user/BusinessDayLive
Excluding the volatile food and energy components, so-called core inflation rose 0.6% from the prior month and 4.2% from a year earlier. The annual increase was the largest since 1991.
Shelter costs — which are considered to be a more structural component of the CPI and make up about a third of the overall index — rose 0.5% in October, the most in four months as higher rents and home prices feed into the data. The cost of hotel stays increased.
Prices for new cars rose 1.4% in October as a global shortage of semiconductors continues to limit inventories and drive up costs. Used-vehicle prices jumped 2.5%.
Americans are also facing higher costs for basic necessities: Food was up 5.3% from year ago, the most since January 2009; fuel rose 6.1% from September, the biggest gain since March; electricity costs jumped 1.8%, the largest monthly increase since 2014; and fuel oil advanced 12.3% from prior month, the most since 2007.
“Higher energy prices, intensification of supply-chain bottlenecks and higher rents all pushed up prices briskly in the consumer basket,” Bloomberg Economics’ Anna Wong and Andrew Husby said in a note. Looking ahead, “those factors and adverse base effects should keep the headline CPI from peaking until January”.
“We haven’t seen, I’ll say, any more resistance to our price increases than we’ve seen historically,” said McDonald’s CFO Kevin Ozan in an October 27 earnings call.
Meanwhile, Procter & Gamble CFO Andre Schulten said on October 19: “We have now announced pricing in nine out of ten categories, so very broad based.”
While most CPI categories rose, the cost of airfares declined for a fourth month and apparel prices were unchanged.
Wages have strengthened markedly in recent months — with some measures rising by the most on record — but higher consumer prices are eroding Americans’ buying power.
Inflation-adjusted average hourly earnings fell 1.2% in October from a year earlier, separate data showed on Wednesday.
Bloomberg News. More stories like this are available on bloomberg.com
Rand loses steam before crucial US CPI data
Gold slips as focus turns to US CPI data
MAMOKETE LIJANE: Taper tantrum? What taper tantrum?
EDITORIAL: Central banks facing an old enemy again
NEWS ANALYSIS: Emerging central banks pressed to raise interest rates
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Canada inflation hits 18-year high amid supply constraints
US inflation edges higher in September
Central bank raises rates in New Zealand for first time in seven years
UK feels pain of kicking imported labour habit
Pace of US consumer price growth cools in August
German inflation surges to 13-year high in August
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.