U.S. inflation rate hits 6.2% in October, highest in over 30 years

U.S. consumer prices jumped 6.2 per cent in October.

Prices for U.S. consumers jumped 6.2 per cent in October compared with a year earlier as surging costs for food, gas and housing left Americans grappling with the highest inflation rate since 1990.

The year-over-year increase in the consumer price index exceeded the 5.4 per cent rise in September, the Labor Department reported Wednesday. From September to October, prices jumped 0.9 per cent, the highest month-over-month increase since June.

Inflation is eroding the strong gains in wages and salaries that have flowed to America’s workers in recent months, creating political headaches for the Biden administration and congressional Democrats and intensifying pressure on the Federal Reserve as it considers how fast to withdraw its efforts to boost the economy.

Job gains and pay raises have been much healthier during the pandemic recovery than they were after the Great Recession roughly a decade ago. But in contrast to the years that followed that downturn, inflation is now accelerating and diminishing Americans’ confidence in the economy, surveys have found.

Excluding the volatile food and energy categories, so-called core prices rose 0.6 per cent in from September to October. Core prices are now up 4.6 per cent compared with a year ago.

Energy costs soared 4.8 per cent just from September to October, with gasoline, natural gas and heating oil surging for the same reason that many other commodities have grown more expensive: Demand has risen sharply as Americans are driving and flying more, but supplies haven’t kept up.

Economists still expect inflation to slow once supply bottlenecks are cleared and Americans shift more of their consumption back to pre-pandemic norms. As COVID-19 fades, consumers should spend more on travel, entertainment and other services and less on goods such as cars, furniture, and appliances, which would reduce pressure on supply chains.

But no one knows how long that might take. Higher inflation has persisted much longer than most economists had expected. And inflation is spreading well beyond items like appliances and new and used vehicles that are directly affected by the pandemic.