In October, US inflation accelerated more than expected, reaching record levels, pressured by persistent problems in global supply chains that significantly affect energy prices.
In the 10th month of the year, prices rose 0.9% from 0.4% in September, according to the Consumer Price Index released Wednesday by the Labor Department. The consensus of analysts expected a rise of 0.6 percent.
In its annual measurement, inflation was 6.2% compared to 5.4% in September. This is the highest level recorded since November 1990, the agency detailed in a statement.
The increase is generalized for all sectors, although it is particularly notable in those of energy, housing, food and vehicles.
The underlying index, which is the one that excludes the most volatile components that are food and energy, accelerated 0.6%, after a rise of 0.2% in September.
The so-called core CPI reached 4.6% in annual terms, the highest increase since August 1991, after having remained at 4.0% for two consecutive months.
For its part, the energy index rose 30% in the last 12 months and the food index increased 5.3 percent.
How much will the rates go up
Until now, US officials have defended the hypothesis that accelerating inflation is a transitory effect caused by the economic reactivation after the Covid-19 pandemic, but that argument is no longer as convincing to many analysts.
Investors increasingly wonder, not whether the Federal Reserve will raise interest rates next year, but how much and how quickly it can do so, The Wall Street Journal reported.
“Today’s report (yesterday) reaffirms that the Fed is in an uncomfortable place,” Tiffany Wilding, an economist at investment firm Pimco, told the US media.
With evidence that the job market is recovering rapidly, this means that interest rates are more likely to rise next year, possibly as early as next summer.
“This result will alter the convergence expectations and diminish the probability that the idea of a transitory inflation could become evident in the short term,” said Marco Arias, an economic analyst at Grupo Financiero Monex, in an analysis.
“Although we do not think that today’s data will radically alter the Federal Reserve’s approach, we consider that, if the dynamics are repeated for November, the probabilities of seeing an accelerated tapering and more than two increases to the reference rate in 2022 they will be substantial, “he added.
At the end of October, the Secretary of the Treasury of the United States, Janet Yellen, said that the expectation was that inflation would return to levels of around 2%, which is the Federal Reserve’s goal, starting in the second half of 2022.
The official noted that problems in supply chains have affected the United States and other countries as the reopening of the economy, after the pandemic, stimulates an increase in demand.
“I don’t think we are about to lose control of inflation. I agree that we are going through a period of inflation that is higher than the one Americans have seen in a long time, and it is something that obviously worries us, but we have not lost control, “he said in an interview with CNN.