As the prices of most basic commodities rose, the inflation rate of the US economy reached its highest level in three years, which exceeded expectations.
On Wednesday, the U.S. Department of Labor released the latest data. Consumer Price Index (CPI)It is a key indicator to measure the level of economic inflation, and found that it rose by 6.2% last year-this is the highest level since November 1990.
Soaring energy prices seem to have driven most of the price increases in the past year. Oil prices rose by 12.3% last month, but last year they rose by 59.1%. Natural gas prices have risen by 6.2% since September, and have increased by 49.6% each year. According to data from the US Bureau of Labor Statistics, the increase in oil prices alone is the highest since 2005.
The prices of food, healthcare, and transportation goods have also risen. The price of used cars rose by 26.5% last year, while the price of newer cars rose by 9.8%, but the increase was smaller but still significant. On a monthly basis, prices increased by 2.5% and 1.4% respectively.
These increases reflect how economic activity has returned to a certain sense of normality that existed before the pandemic. At the same time, it shows how companies are unprepared for the explosive growth of demand. After more than a year of restrictive measures have basically ended, this demand is still suppressed.
The Delta variant of COVID-19 has been slowly fading, but the aftershocks can still be felt across the economy.Supply chain bottleneck has been Driven out The price of many goods before the holidays Labor shortage This has yet to show some signs of relaxation.
Rising inflation also poses a challenge to the consensus between the White House and the Fed that price increases may be temporary.For weeks, from President Joe Biden arrive Federal Reserve Chairman Jerome Powell The view that inflation will fade has been maintained, but it is clear that this may not be the case in the short term.
Jason Furman, the former chairman of President Obama’s Council of Economic Advisers, wrote after the release of the new data that some of these trends may still be reversed. However, he pointed out that “the prices of services related to the pandemic” still have room to rise, further challenging the prevailing perception of the nature of today’s inflation.
Furman said on Twitter: “The huge mistake of predicting inflation in October (for the prediction made *after the month actually ended) is a good reminder that we should keep a humble attitude and move forward.” “Inflation It may be higher or lower than our expectations.”
Looking ahead, the prices of services related to the epidemic have more room to rise, but they are still very low (especially air tickets). We may be at the beginning of rising housing prices. pic.twitter.com/kqnnB5iwgA
-Jason Furman (@jasonfurman) November 10, 2021
The huge error in forecasting inflation in October (for the forecast made *after the actual end of* month) is a good reminder that we should remain humble. Inflation may be higher or lower than our expectations.
-Jason Furman (@jasonfurman) November 10, 2021
