By Nathalie Voit
Consumer prices in November jumped to their highest levels since 1982, according to Labor Department data released on Friday.
The Consumer Price Index (CPI), which tracks changes in the “weighted-average price of a basket of common goods and services,” rose 6.8% over twelve months in November. This marked the biggest year-on-year (YoY) advance in the index in nearly four decades.
On a monthly basis, the CPI increased 0.8% from October after seasonal adjustment, slightly down from the 0.9% upsurge recorded in October.
Core CPI, which excludes the volatile food and energy categories, climbed 0.5% in November, following a 0.6% increase in October. YoY, core CPI exhibited 4.9% annual price growth, the most since mid-1991 and larger than last month’s 4.6% reading.
The indexes that experienced the biggest price hikes in the core CPI were shelter, new and used vehicles, household furnishings and operations, apparel, and airline fares, the DOL said.
According to the BLS report, the 6.8% increase in the all-items index was driven largely by soaring energy prices, which climbed 33.3% over the last year. Gasoline prices alone rose 58.1% from one year ago, representing the largest twelve-month increase since April 1980.
MoM, energy prices were up by 3.5% from October, following large increases in the indexes for gasoline (+6.1%), energy commodities (+5.9%), and fuel oil (3.5%).
The food index jumped 6.1% from November 2020, propelled by a 6.4% and 5.8% rise in the price of food at home and food away from home, respectively. MoM, the food index grew 0.7%.
November’s figures were in line with Wall Street forecasts, which had braced for a 6.8% CPI headline in November, according to economists polled by Reuters. Core CPI data also met analyst expectations, coming in at 4.9%.
“Today’s rise in U.S. inflation was broadly expected, but it does confirm that price pressures continue to build but also broaden out,” said global market strategist at J.P. Morgan Asset Management Jai Malhi.
Investors expect the Fed to speed up the tapering process and raise rates as early as next spring.
“Inflationary pressures are building in the economy, and that is going to force the Fed’s hand,” said Chris Zaccarelli, CIO for the Independent Advisor Alliance. “Specifically, the Fed is going to have to increase the pace of their tapering plans – potentially reducing their buying twice as quickly, down by $30 billion/month instead of $15 billion/month – and then look to either balance sheet reduction or interest rate hikes, in order to combat inflation.”
