November inflation rate hits nearly 40-year record

The US Department of Labor announced that inflation was at its fastest pace since 1982. This put pressure on the economic recovery and raised rates for the Federal Reserve. The publication told about this in more detail. CNBC.

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The Consumer Price Index, which measures the value of a diversified basket of goods and services, rose 0,8% month-over-month, matching a 6,8% year-on-year growth rate, the highest since June 1982.

Excluding food and energy prices, the so-called core consumer price index rose 0,5% MoM and 4,9% YoY. This was the sharpest increase in the indicator since mid-1991.

The headline consumer price index (CPI) rose 6,7% year over year, while the core consumer price index rose 4,9%, according to Dow Jones estimates.

Since November 2020, energy prices have increased by 33,3%, including 3,5% in November alone. Gasoline rose in price by 58,1%.

On the subject: What is shrinkflation and how it replaced inflation in American stores

Food prices jumped 6,1% year-over-year, while used cars and trucks, the main reason for the spike in inflation, rose 31,4% after rising 2,5% last month.

The Labor Department said the increase in food and energy prices was the fastest 12-month increase in 13 years.

Housing prices, which account for about one-third of the CPI, were up 3,8% year-on-year, the highest since 2007 as the housing crisis intensified.

Representatives of the Federal Reserve System (FRS) attributed the jump in inflation to factors related to the pandemic. Strong consumer demand for goods and supply chain problems were the main drivers, although price increases were stronger and more sustained than expected.

“There is no doubt that even if you take away all the impacts of the pandemic, inflation will still be very high,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.

Central Bank officials are ready to start slowing down aid to curb inflation. Investors expect the Fed to double its cut in asset purchases to $ 30 billion a month, likely starting in January. This will allow the Fed to start raising interest rates in the spring of the coming year.

Inflationary pressures hit workers hard.

While gross wages have increased 4,8% over the past year, real average hourly wages adjusted for inflation declined 0,4% in November and 1,9% over a 12-month period.

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While much of the inflation in the pandemic era has arisen from the surge in demand for goods such as cars and other durables, inflation in the service sector is also on the rise. The cost of services increased by 0,4% in November and by 3,4% for the year, which is the fastest growth rate in April 2007.

The rise in prices for clothing became noticeable during the month, increasing by 1,3% over the month and by 5% over the year.

However, some economists believe that inflation is close to its peak, especially given the decline in energy prices in recent weeks. While West Texas Intermediate crude rose more than 52% in 2021, it is down about 14% from its last peak in November.

With jobless claims at their lowest level since 1969 and gross domestic product expected to show significant gains by the end of 2021 after a disappointing third quarter, inflation remains the biggest challenge to recovery.

US President Joe Biden paid the political price for rising prices: a recent poll found his approval rating stuck at 41% in large part because 56% of respondents disapprove of his economic success, compared with 37% who approve ...

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What is shrinkflation and how it replaced inflation in American stores

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