Inflation jumped to the highest level in several decades. The consumer price index (CPI) jumped 6.2% from a year ago, the most since 1990. The CPI is a basket of products ranging from gasoline to rents and groceries.
In October, inflation across a large swath of products that people have to buy on a daily basis was even worse than expected, according to the Labor Department. Moreover, on a monthly basis, the consumer price index rose 0.9% against the 0.6% estimate.
Without taking into account volatile food and energy prices, the so-called core CPI was up 0.6% against the estimate of 0.4%. Annual core inflation stood at 4.6%, compared with the 4% expectation and the highest in more than 30 years.
Last month, fuel oil prices soared 12.3%, part of a 59.1% increase over the past year. Besides, energy prices overall rose 4.8% in October and are up 30% for the 12-month period.
Used vehicle prices played an important role again, rising 2.5% for the month as well as 26.4% for the year. New vehicle prices also increased in October. Prices were up 1.4% and 9.8%, respectively.
Also, food prices showed a sizeable bounce, up 0.9% and 5.3% respectively. The food category includes various products. Within the category, meat, poultry, as well as eggs collectively rose 1.7% for the month and 11.9% year over year.
Consumer price index and interesting details
It is not the only report that contained interesting details. The Labor Department released another report as well. The department said real wages after inflation declined 0.5% from September to October, the product of a 0.4% increase in average hourly earnings that were more than offset by the consumer price index surged.
Shelter costs which represent one-third of the consumer price index computation increased 0.5% for the month. Currently, shelter costs are up 3.5% on a year-over-year basis. Regrettably, the annual pace is the highest since September 2019.
The data stated above comes as policymakers maintain that the current price pressures are transitory. Federal Reserve’s Chairman Jerome Powell and Treasury Secretary Janet Yellen admitted that inflation has been more persistent than they expected. Still, they see conditions returning to normal over the next year or so.
Nonetheless, inflation could force the central bank to change its position. The Federal Reserve indicated that it will within the next couple of weeks start reducing the amount of bonds it buys each month. Officials, however, are not ready to increase interest rates.