U.S. consumer prices rose 5.7% over the past year, the fastest pace in 39 years, as a surge in inflation confronts Americans with the holiday shopping season in the home stretch.
The November increase, reported Thursday by the Commerce Department, followed a 5.1% rise for the 12 months ending in October, continuing a string of annual price gains that have run well above the 2% inflation target set by the Federal Reserve.
Consumer spending, which accounts for 70% of U.S. economic activity, rose 0.6% in November, a solid gain but below the 1.4% surge in October.
“Consumers spent with less enthusiasm in November as they shifted their holiday shopping to earlier in the season and continued to contend with escalating prices and reduced product availability,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
Personal incomes, which provide the fuel for future spending increases, rose 0.4% in November, slightly lower than the 0.5% increase in October. Both gains came after a 1% plunge in incomes in September, the month that government benefit programs such as expanded unemployment benefits came to an end.
The big jump in the Commerce Department’s price gauge was similar to the rise in the consumer price index, up 6.8% for the 12 months ending in November, also the biggest surge by this measurement in 39 years.
While the CPI is the better known price gauge, the Federal Reserve prefers to follow the Commerce Department’s personal consumption expenditures price index in setting its interest-rate policies to fight inflation. The PCE price index tracks the actual purchases consumers are making each month while the CPI follows a fixed market basket of goods.
For the month of November, the PCE price index rose 0.6%, slightly lower than the 0.7% monthly gain in October. Core inflation, which excludes volatile energy and food prices, rose 0.5% in November. Core inflation has risen 4.7% over the past 12 months. That is the fastest pace for the core reading since a 5.1% rise in the 12 months ending in September 1983.
The 5.7% increase for overall inflation was the fastest 12-month gain since a 5.8% increase for the 12 months ending in July 1982.
Republicans contend that the sizable gains in inflation are evidence that President Joe Biden’s economic policies are not working and are actually harming Americans whose incomes are not keeping up with rising prices.
The administration, however, points to the nation’s rapid re-opening following a pandemic-triggered recession, an economic event that is unprecedented in our lifetimes.
Suppliers have been unable to keep up with demand, pushing prices up sharply and clogging the nation’s ports with goods that can’t be unloaded fast enough.
The Federal Reserve last week announced that it was accelerating the pace of change to fighting inflation pressures with an expectation that it could raise interest rates next year by possibly three times to slow growth and keep inflation from getting out of hand.
While the Fed has stopped calling the inflation increase transitory, Biden administration officials continue to insist that the price surge being seen now will start to fade next year as supply chain problems get resolved. They noted that energy prices including the cost of gasoline have already started to fall.
The government reported Wednesday that the overall economy, as measured by the gross domestic product, grew at an annual rate of 2.3% in the July-September quarter, up from a previous estimate of a slightly slower 2.1% gain.
Economists are expecting more rapid growth perhaps as high as 7% in the current quarter although some analysts are saying that rebound could be jeopardized if the new COVID omicron variant keeps spreading and triggers another shutdown of the economy.
10 thoughts on “Consumer prices up 5.7% over past year, fastest in 39 years”
Let’s Go Brandon!
Thank you, Dementia Joe and your anti-American, down-with-the-USA, one-world handlers.
Nothing to see here, it’s just transitory.
Funny that comments here are directed at the President when inflation is occuring globally. It’s like you guys think the US President is directly responsible for the global supply chain.
Lower your expectations, right Wes? Do you think the brain dead old man you voted for even knows what inflation is?
Chuck, learn economics.
Let’s Go Brandon!!! Keep the energy prices high so we get to pay more for basic living expenses so we have less to invest elsewhere!
Energy prices aren’t significantly higher today than they were under the 45th president pre-Covid. (I paid $2.64 for gas yesterday.)
CONSEQUENCES. Regardless of who sits in the oval office, their policies have consequences. Shut down a key pipeline and restrict US oil exploration and the consequences are … instant reversal of being a net energy exporter for the first time since records have been kept … back to being a net energy importer … with everyone paying substantially more for … everything. Trump had mean tweets but excellent policies, from energy to immigration to foreign affairs to a PRO BUSINESS platform. Biden leads a party of mean tweeters … that carry his water … which is really others water as he has no water … while he drifts to and fro in la-la land. We are all paying the consequences of Biden’s failed policies … getting less for each dollar we earn as inflation spirals out of control from temporary to permanent. This hurts the poor and most vulnerable more than anyone! And the Democrat mainstream media … or is it the mainstream media Democrats … actually one-in-the-same, are quiet about the unnecessary damage being done, as they look the other way and murmur “nothing to see here …”. Our enemies on the world stage … (yes we definitely have enemies) … are very satisfied that “America has become weak overnight” … as we focus on rampant urban crime, a new “woke” military ill-equipped to deter our enemies, a perilous game to stack up national debt as tall as imaginable, and an economy that delivers “less for more”. We simply must stop enabling the vocal, small minority to call the cultural and political shots. Time for the silent majority to rise up and find their voice!
Just about everything you said is false.