WASHINGTON: For months now, blistering inflation has been a hallmark of this year’s global economic rebound from last year’s COVID-19 blow. And in the United States – the world’s largest economy – price pressures continue to accelerate at a pace not seen for three decades.
US consumer prices jumped a blistering 6.2 percent in October from the same period a year ago, the US Department of Labor said on Wednesday. That is the fastest pace since 1990 and blew past many analysts’ already dour inflation estimates.
On a monthly basis, the Consumer Price Index (CPI) increased 0.9 percent in October, after rising 0.4 percent in September.
Supply chain bottlenecks and shortages of raw materials and workers are driving prices ever higher for US businesses, which in turn are increasingly passing those increased input costs onto American consumers.
That matters deeply to the health of the US economy given two-thirds of its growth is driven by consumer spending.
So far, the steward of the US economy, the Federal Reserve, has been unconcerned about this year’s rise in inflation, insisting that price pressures will prove temporary and eventually ease down.
The Fed has decided to start dialling back bond purchases which have helped buoy the economy during the pandemic. But it said that should not be taken as a signal that it is ready to raise interest rates – the sharpest tool at its disposal for reining in inflation – any time soon.
