Inflation increased at the fastest rate since 1982, surpassing projections, the Labor Department announced Friday.
The consumer price index surged 0.8 percent for the month and 6.8 percent year-over-year, the fastest increase since June 1982, when inflation touched 7.1 percent. The core CPI, which excludes the more volatile food and energy costs to depict a more balanced assessment of inflation, increased 0.5 percent for the month and 4.9 percent from a year ago, alone representing the sharpest uptick since the early 1990s.
Energy prices have risen dramatically in the last year, up 33.3 percent since November 2020, including a 3.5 percent climb in November. Gasoline increased by 6.1 percent for the second consecutive month and 58.1 percent overall.
Among the commodities and services that saw price increases in November were vehicles, rent, furniture, and airline fares. Prices for recreation and communication decreased last month, however.
The latest report ups the ante for the Federal Reserve, whose chairman Jerome Powell, in addition to Treasury Secretary Janet Yellen, recently abandoned the talking point that inflation is “transitory” due to the persistent hikes. To curb spiraling inflation, the Fed might be compelled to raise interest rates, which comes with its own economic implications.
During a hearing before the Senate Banking Committee last week, chairman of the Powell said it’s time to retire the word “transitory,” conceding that it engenders public confusion and doesn’t reflect the reality that many Americans’ wallets are feeling more inflationary pressure than they have years. Throughout the pandemic, the Fed’s official position was that inflation was a short-term phenomenon triggered by production bottlenecks that would rectify in time. After many months of inflation, the Fed has backtracked on that prediction.
“I think the word ‘transitory’ has different meanings to different people. To many it carries a sense of short-lived. We tend to use it to mean that it won’t leave a permanent mark in the former of higher inflation. I think it’s probably a good time to retire that word and try to explain more clearly what we mean,” Powell said. “Clearly the risk of more persistent inflation has risen.”
The alarming price movements have not yet factored in the Omicron variant of Covid-19, only discovered just after Thanksgiving but expected to spread across the country, which could threaten to further disrupt supply chains, fueling prolonged inflation.