Consumer prices in the United States climbed 6.8% last year, most since 1982, Retail News, ET Retail


[ad_1]

WASHINGTON: Prices for U.S. consumers jumped 6.8% in November from a year earlier, with soaring costs for food, energy, shelter and other items leaving Americans to suffer their highest annual inflation rate since 1982.

The Labor Department also reported on Friday that from October to November, prices jumped 0.8%.

Inflation has intensified the pressure on consumers, especially low-income households and especially for daily necessities.

It also reversed the higher wages many workers received, complicated the Federal Reserve’s plans to cut aid to the economy, and coincided with declining public support for President Joe Biden.

Inflation has been fueled by a mix of factors resulting from the rapid rebound from the pandemic recession: a flood of government stimulus, ultra-low rates designed by the Fed, and supply shortages at factories in the United States. and abroad.

Manufacturers have been slowed by stronger than expected customer demand, Covid-related closures and overwhelmed freight ports and stations.

Employers, struggling with labor shortages, have also raised wages, and many have raised prices to offset their higher labor costs, adding to inflation. .

This has resulted in price spikes for goods ranging from food and used vehicles to electronics, household furniture and rental cars.

The acceleration in prices, which began after the pandemic struck as Americans trapped in homes flooded factories with orders for goods, spilled over to utilities, from apartment rents and restaurant meals to medical services and entertainment.

Persistently high inflation surprised the Fed, whose chairman Jerome Powell had for months called inflation only “transient,” a short-term consequence of congested supply chains.

Two weeks ago, however, Powell signaled a change, implicitly acknowledging that high inflation has lasted longer than he expected. He suggested that the Fed would likely act faster to phase out its ultra-low rate policies than it previously anticipated.

Some economists are hoping that inflation will peak over the next few months and then gradually subside and bring some relief to consumers.

They note that supply shortages in some industries have started to gradually ease. And while higher energy costs will continue to weigh on consumers over the next several months, Americans will likely be spared from earlier predictions that energy prices would hit record highs over the winter.

Oil prices fell slightly, which in turn led to a slight drop in gasoline prices.

A gallon of gasoline costs an average of $ 3.38, according to AAA, up from $ 3.42 a month ago.

Even more dramatic, natural gas prices have fallen almost 40% from a seven-year high reached in October.

The result is that while average home heating costs will far exceed last year’s levels, they will not increase as much as feared.

Food prices could also weaken as prices for corn and wheat fell sharply from their highs at the start of the year.

The average cost to heat a home this winter will be around $ 972, said Mark Wolfe, executive director of the National Energy Assistance Directors Association.

That’s less than the $ 1,056 his group predicted in October, but still more than the $ 888 average consumers paid to heat their homes last year.

A number of factors have combined to push down energy prices in recent weeks.

The unusually warm weather helped push down natural gas futures.

In addition, the United States and several other major nations have agreed to release oil from their strategic reserves.

And the OPEC + oil cartel came to an agreement to release more oil in January.

Additionally, the emergence of the omicron variant of the coronavirus has renewed the prospect of more canceled or postponed trips and fewer restaurant meals and errands.

All of this, if it happened, would slow consumer and business spending and potentially limit inflation.

Still, analysts warn that unexpected developments, including severe winter storms, with potentially increased demand for energy, could push energy prices up again.

And analysts have warned that easing global inflationary pressures will depend on further progress in normalizing global supply chains.

Senior White House officials have said they believe a range of measures the administration has taken, ranging from increasing the handling of cargoes at Los Angeles and Long Beach ports to releasing crude oil from the oil reserve would help defuse inflationary pressures. .

Some outside economists have started to echo this point of view.

“I think November will be the worst, and going forward we will see steady improvement,” said Mark Zandi, chief economist at Moody’s Analytics. “As the COVID delta wave has receded and supply chains begin to repair themselves, we will start to see production and shipments improve. ”

Zandi said he believed inflation would start to improve with the December price report, and that by the same time next year, annual inflation would have fallen back to around 3%, closer to the Fed’s 2% target.

For now, however, amid persistently high inflation, the Fed is expected to announce after its meeting next week an acceleration in the reduction of its monthly bond purchases. These purchases were aimed at reducing long-term borrowing costs.

This would put the Fed on track to start raising its key short-term interest rate as early as the first half of next year.

This rate has been close to zero since March 2020, when the coronavirus plunged the economy into a deep recession.

[ad_2]

Comments are closed.