The price of goods and services rose to a 30-year high in the world’s largest economy the U.S in the month of October, according to the latest data released by the Labor Department on Wednesday.
Consumer Price Index, which measures inflation rate, rose from 5.4 percent year-on-year filed in September to 6.2 percent year-on-year in October. The increase was the largest since December 1990.
On a monthly basis, inflation rose by 0.9 percent in October, faster than the 0.4 percent recorded in September and above 0.4 percent predicted by economists interviewed by Reuters.
The increase was a result of rising energy costs caused by global supply constraints, an increase in consumer demand worsened by logistic disruption, and the inability of companies to lure desirable expertise back to work after stimulus payment from the government.
The increase was “broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors”, the labor department said. “The energy index rose 4.8% over the month, as the gasoline index increased 6.1% and the other major energy component indexes also rose. The food index increased 0.9% as the index for food at home rose 1%.”
Last week when the Fed announced tapering commencement, Fed Chair Jerome Powell said inflation had been “longer lasting than anticipated”. However, he said the central bank still expected price increases to be “transitory” even though it was “very difficult to predict the persistence of supply constraints or their effects on inflation”.
The report shows prices rose across the board with the cost of clothes, car parts, shelter, energy, food and lawnmowers all rising. The energy index grew by 30 percent in the last 12 months, worsening the situation of many Americans and adding to the fear it could derail the ongoing progress. The food index also rose by 5.3 percent in the last 12 months.
