[ad_1]
Author: Lucia Mutikani
WASHINGTON (Reuters) – US consumer prices rose sharply in November as Americans paid more for food and supplies, making the biggest profit of the year since 1982, creating a political nightmare for President Joe Biden’s administration and boosting hopes of starting the Federal Reserve. raising interest rates next year.
The Labor Department’s report on Friday, following a series of data showing that the labor market is tightening rapidly this month, is likely to predict that the US central bank is accelerating the decline in its massive bond. shopping at next week’s policy meeting.
As there are few signs of easing the supply chain, and as companies compete with low-wage workers, high inflation could continue in 2022. The rising cost of living, a result of the shortage caused by the relentless COVID-19 pandemic, is undermining Biden’s approval. assessment. The White House and the Fed have described this year’s high inflation as transient.
“There’s not much room to get rid of this inflation from the pandemic or reopening anomalies,” said Will Compernolle, a senior economist at FHN Financial in New York. “Inflation is a tax, and gas and food are one of the most backward aspects of it. Low-income Americans spend both in excess.”
The consumer price index rose by 0.8% in the last month, after rising by 0.9% in October. A broad-based rise was driven by gasoline prices, which rose by 6.1%, in line with the October gain. As prices have fallen sharply, gas prices have soared.
Food prices rose by 0.7%. The cost of household food rose by 0.8%, driven by rising prices for fruit and vegetables, meat and cereals and bakery products. The price of household food has risen by 6.4% in the last 12 months, the highest since December 2008. Dining has also been more expensive in the last month.
In the 12 months to November, the CPI accelerated by 6.8%. This was the largest year-on-year increase since June 1982, rising by 6.2% in October. Economists surveyed by Reuters predicted that the CPI would rise by 0.7% and rise by 6.8% year-on-year.
Rising inflation is eroding wage gains. Inflation-adjusted average weekly earnings fell by 1.9% in November year-on-year.
Biden acknowledged that high inflation has increased the burden on home budgets while trying to reassure Americans that the country is moving forward in efforts to alleviate supply bottlenecks.
“We are moving forward with the pandemic-related challenge in our supply chain, which makes it expensive to put goods on the shelves, and I expect more progress in the coming weeks,” Biden said in a statement.
In fact, gasoline prices have been falling since the end of November. This helped boost consumer sentiment in early December, a separate University of Michigan survey showed on Friday.
(Graphic: Consumer sentiment: present vs. future, https://graphics.reuters.com/USA-STOCKS/lbpgnlwwkvq/umich.png)
Investors calmly embraced strong inflation readings. US stocks were trading higher. The dollar slipped against a basket of currencies. US Treasury prices rose.
STAYING IN THE LABOR MARKET
The government announced last week that the unemployment rate had fallen to a 21-month low of 4.2% in November. Tightening labor market conditions A report on Thursday highlighted that new claims for unemployment benefits fell to a 52-year low last week.
Other data this week showed that 11 million jobs were opened by the end of October and that Americans were leaving jobs at record-breaking rates. Fed Chairman Jerome Powell said the U.S. central bank should consider accelerating the reduction in its bond purchases at next week’s policy meeting.
“The Fed has no choice but to accelerate the cut and prepare for the rate hike much earlier than expected a few months ago,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
Excluding volatile food and energy components, the CPI rose 0.5% last month after gaining 0.6% in October. The so-called basic CPI was supported by rent, which is equivalent to the rent of the owner’s main home, which is what a homeowner would receive for renting a home, up 0.4%.
(Chart: Core CPI, https://graphics.reuters.com/USA-STOCKS/egvbkolqnpq/corecpi.png)
Hotel and motel accommodation also costs more for clothes, household furniture and health care.
Used car and truck prices rose by 2.5% for the second month in a row. Prices for new motor vehicles rose by 1.1% and rose for the eighth consecutive month. A global shortage of semiconductors has reduced the production of motor vehicles.
Aircraft prices rebounded 4.7%. But it is likely that profits will be reduced with the expansion of the Omicron variant of COVID-19, which may cause some people to hesitate to travel by plane. The United States is already experiencing a resurgence of coronavirus infections, driven by Delta variants.
But the cost of motor vehicle insurance fell. Leisure prices fell after nine consecutive months of gains. The so-called core CPI rose by 4.9% year-on-year, the highest increase since June 1991, after rising by 4.6% in October.
The Fed monitors the Consumer Spending (PCE) price index by removing volatile food and energy components for a flexible 2% inflation target. The basic PCE price index rose by 4.1% in the 12 months to October, the most since January 1991. November data will be released later this month.
(Chart: Rising COVID inflation, https://graphics.reuters.com/USA-FED/INFLATION/akvezawxopr/chart.png)
Economists expect the year-on-year CPI to rise above 7% and the base CPI to rise above 6%.
“The latest strength of CPI and PCE inflation reflects factors that are temporary and should disappear over time, and factors that may be more sustainable,” said Daniel Silver, a New York economist at JPMorgan (NYSE :). “But the tightening of the labor market is likely to continue over time and this should keep up the pressure on inflation.”
[ad_2]
Source link
