Inflation Surged Once more in October, With P.C.E. Index Climbing 5 P.c

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A key measure of inflation showed that consumer prices rose their fastest rate in three decades as energy prices and demand for goods and services skyrocketed, challenging both the White House and the Federal Reserve.

Prices rose 5 percent in the 12 months to October, according to personal consumer spending price index data released on Wednesday. That was the fastest increase since 1990.

The bar was raised by a 30.2 percent increase in energy prices and a 4.8 percent increase in food prices. Prices rose 0.6 percent from September to October as supply chain disruptions further limited the availability of certain products and components.

The increases were in line with analysts’ expectations, but the increase in the Federal Reserve’s preferred inflation meter will only increase pressure on the central bank to take faster action to keep prices stable.

Price increases have shown little sign of easing, as some Biden administration and Fed officials argued earlier this year. The central bank is facing mounting calls to accelerate its plans to end its stimulus bond-buying program and start raising interest rates, a process that could slow employment growth and economic growth.

While inflation has dampened consumer sentiment and weighed on Mr Biden’s approval ratings, these price increases were in part driven by a strong economic recovery. Separate data released Wednesday by the Department of Labor found that initial jobless claims fell to their lowest level since 1969, down 71,000 last week to 199,000.

Mr Biden hailed the decline in unemployment claims on Wednesday but admitted the country is still a long way from a full recovery and needs to cope with rising inflation.

“We have more work to do before our economy returns to normal, including tackling price hikes that are hurting Americans’ pockets and undermining wage growth and disposable income,” Biden said in a statement Wednesday.

To lower gas prices, the US and five other world powers announced on Tuesday a coordinated effort to tap their national oil supplies. Mr Biden has ordered the Department of Energy to release 50 million barrels of crude oil in the Strategic Petroleum Reserve, less than what traders expected from the emergency storage facility, which is the largest in the world at 620 million barrels.

Consumers are increasingly concerned about the rise in prices. A University of Michigan poll released Wednesday found that consumers were less optimistic in November than they had been in the past decade about the outlook for their finances and overall economic growth. The drop in consumer sentiment, according to the report, was due to the rapid rise in inflation and the lack of federal measures that would fix the damage to household budgets.