U.S. inflation hit its highest year-over-year surge in more than 30 years last month, according to the Department of Labor.
The consumer price index, a basket of products economists use to track overall changes in price, surged 6.2% from October 2020 to last month, the fastest annual rate since 1990. Inflation during the month of October alone surged 0.9%, driving the year-over-year rate above the 5.9% that economists predicted. Monthly inflation in October was expected to clock in at 0.6%, according to CNBC.
Sectors of the economy hardest hit include fuel, used vehicles, and food. As CNBC reported:
Fuel oil prices soared 12.3% for the month, part of a 59.1% increase over the past year. Energy prices overall rose 4.8% in October and are up 30% for the 12-month period.
Used vehicle prices again were a big contributor, rising 2.5% on the month and 26.4% for the year. New vehicle prices were up 1.4% and 9.8% respectively.
Food prices also showed a sizeable bounce, up 0.9% and 5.3% respectively. Within the food category, meat, poultry, fish and eggs collectively rose 1.7% for the month and 11.9% year over year.
MacroPolicy Perspectives senior economist Laura Rosner-Warburton told The Wall Street Journal that the United States is entering a period of particularly high inflation.
“I do think we’re moving into a new phase where inflation is broader and where things are going to get a little more intense,” she said. “Part of that reflects that [supply-chain] bottlenecks are not resolved going into the holiday season, when a lot of purchases get made, and that the economy is doing really well, so you have strong demand.”
Principal Global Investors chief strategist Seema Shah told CNBC: “Inflation is clearly getting worse before it gets better, while the significant rise in shelter prices is adding to concerning evidence of a broadening in inflation pressures.”
The rise in prices comes as U.S. manufacturing and retail companies struggle to get goods and resources through supply chain bottlenecks that have been tight since the start of the pandemic and widespread lockdowns. The falling value of the dollar also comes on the heels of multi trillion-dollar spending bills the United States authorized as COVID aid packages.
Last week, President Joe Biden touted more spending bills as the answer to the financial pain Americans are feeling because of inflation. Specifically, Biden pushed his “Build Back Better” spending plan. Biden stated:
I want to say very clearly: If your number one issue is the cost of living, the number one priority should be seeing Congress pass these bills. Seventeen Nobel Prize winners in economics have said — spontaneously wrote to me, together, and said this will lower inflationary pressure on the economy when we pass my bills. A new analysis from the Wall Street firm of Moody’s Analytics found that it will ease the financial burden of inflation for middle-class families.
Put another way: These will — these bills will provide families with, as my dad used to say, “just a little more breathing room.” That’s because the Build Back Better framework lowers your bills for healthcare, childcare, prescription drugs, and preschool. And families get a tax cut. That’s how you end some of the anxiety people are feeling about the economy. That’s how we give people some breathing room.