Consumer prices in the United States rose at the fastest rate in 30 years in October, as supply chain issues from the pandemic and increasing demand drove prices for everything up, of gasoline to homes, a total of 6.2% over last year.
After slowing for three months, inflation is picking up again, fueling fears that prices will get out of hand and halt the US recovery. Compared with September, inflation jumped 0.9% in October, an unprecedented rate since June.
At the time, only one element, used cars, was largely responsible for the increase in the overall rate. This time around, the prices of almost everything have gone up, with energy in particular accounting for a large part of the monthly increase. The general increases will impact more Americans, but like soaring used car prices, they are the result of temporary disruptions that are likely to fade away, according to most observers.
Why were prices higher in October?
The jump in energy prices – they were up 4.8% on the month – was mainly attributable to a 12.3% increase in fuel oil (used to heat, cook and power appliances) caused by the drop stocks. Meanwhile, the more expensive beef helped push food prices up 0.9%. Excluding food and energy, prices rose 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 though building materials, including lumber, cooled over the summer, price increases in other home supplies, such as garage parts and microwaves, kept prices going. houses at a high standard.
Inflation for these items is expected to slow as supplies normalize. This is what happened with the prices of used cars. In June, car rental companies, usually big car sellers, were more on the buyer’s side to restock the fleets they had. sold a year earlier due to the pandemic. Meanwhile, a semiconductor shortage has reduced the supply of new cars. But as these issues abated, prices fell. (The most recent supply chain crisis is once again pushing the prices of used cars and trucks up.)
Energy now suffers from a similar inflation problem on the supply side, with oil-producing countries struggling to restock fuel stocks in a context of recovery in consumer demand. The question has US President Joe Biden considering releasing oil from the nation’s emergency stockpile.
But the higher inflation rate is unlikely to veer the Federal Reserve off course to hold interest rates until the labor market recovery is firmer. The central bank has said it expects supply constraints to ease until mid-2022.