US consumer prices surge at fastest pace in 30 years

Washington

US consumer prices increased more than expected in October as the cost of petrol and food surged, leading to the biggest annual gain since 1990, further signs that inflation could remain uncomfortably high well into next year amid snarled global supply chains.

The consumer price index rose 0.9 per cent last month after gaining 0.4 per cent in September, the Labor Department said on Wednesday (Nov 10). In the 12 months through October, the consumer price index (CPI) accelerated 6.2 per cent. That was the largest year-on-year advance since November 1990 and followed a 5.4 per cent jump in September.

Excluding the volatile food and energy components, the CPI gained 0.6 per cent after climbing 0.2 per cent in September. The so-called core CPI jumped 4.6 per cent on a year-on-year basis, the largest increase since August 1991, after being steady at 4.0 per cent for 2 straight months. Economists polled by Reuters had forecast the overall CPI shooting up 0.6 per cent and the core CPI rising 0.4 per cent.

Inflation is heating up again as the economic drag from the summer wave of Covid-19 infections, driven by the Delta variant, fades and supply bottlenecks persist. Trillions of dollars in pandemic relief from governments across the globe fuelled demand for goods, leaving supply chains overstretched.

The nearly 2-year long pandemic has upended labour markets, causing a global shortage of workers needed to produce raw materials and move goods from factories to consumers. The government reported on Nov 9 that producer prices increased strongly in October, reversing a slowing trend in the monthly PPI that had become entrenched since spring.

With labour scarce, companies are holding on to their workers. In another report on Wednesday, the Labor Department said initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 267,000 for the week ended Nov 6.

That was the lowest level since the middle of March in 2020, when the economy almost ground to a halt under the onslaught of mandatory business closures aimed at slowing the first wave of Covid-19 infections. Claims, which have now declined for 6 straight weeks, are within striking distance of their pre-pandemic level. REUTERS