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Nov. 10, 2021, 12:31 p.m. EST

Consumer prices soar again and push U.S. rate of inflation to 31-year high

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By Jeffry Bartash

The numbers: The cost of living rose sharply again in October as Americans paid more for staples such as gas and groceries, pushing the rate of inflation to a nearly 31-year high and adding financial pressure on U.S. households.

The consumer price index jumped 0.9% last month, the government said Wednesday . Economists polled by The Wall Street Journal had forecast a 0.6% increase.

The pace of inflation over the past year marched to 6.2% in October from 5.4% in the prior month. That’s more than triple the Federal Reserve’s 2% target and is the highest rate since November 1990.

The latest in a string of high inflation readings is likely to put more pressure on the Fed and could even hasten its plans to phase out stimulus for the economy. The central bank has taken unprecedented steps to keep interest rates ultra low.

The White House has also grown worried. “Inflation hurts Americans pocketbooks, and reversing this trend is a top priority for me,” President Biden said in a statement Republicans have blamed his policies for contributing to the surge in inflation.  

Another closely watched measure of inflation that omits volatile food and energy costs rose 0.6% last month. This so-called core rate is closely followed by economists as a more accurate measure of underlying inflation.

The 12-month increase in the core rate climbed to 4.6% from 4% and hit a 30-year peak.

Read: U.S. adds 531,000 new jobs in October as economy recovers

Big picture: High inflation is set to persist into early 2022 because of ongoing shortages of labor and supplies that are unlikely to easy soon.

Companies such as UPS /zigman2/quotes/201245396/composite UPS -1.87% , Kraft /zigman2/quotes/203625533/composite KHC +0.98% and Krispy Kreme /zigman2/quotes/227704127/composite DNUT -3.23% have to pay more for wages and materials and they still can’t produce enough goods and services to meet demand. Many are raising prices to offset the higher costs to themselves.

Read: Wholesale prices surge again and offer no relief from high inflation

The latest surge in the consumer prices is sure to raise fresh worries at the Fed.

Chairman Jerome Powell and other senior Fed leaders say inflation should subside next year and return close to their 2% target, but they acknowledge price pressures have been much stronger than they anticipated. They say they are watching prices closely and are prepared to respond if high inflation persists.

The surge in prices for rent, gas, groceries, cars and many other goods and services has put a big dent in consumer confidence and could even threaten the economic recovery unless inflation relents.

Read: Top Fed officials signal interest-rate increases in 2022 are on the table

“I am acutely aware that this period of rising prices is painful for many Americans,” Philadelphia Federal Reserve President Patrick Harker said on Monday.

/zigman2/quotes/201245396/composite
US : U.S.: NYSE
$ 206.54
-3.93 -1.87%
Volume: 1.92M
Jan. 14, 2022 4:02p
P/E Ratio
27.83
Dividend Yield
1.98%
Market Cap
$179.51 billion
Rev. per Employee
$173,748
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/zigman2/quotes/203625533/composite
US : U.S.: Nasdaq
$ 38.02
+0.37 +0.98%
Volume: 5.35M
Jan. 14, 2022 4:00p
P/E Ratio
20.36
Dividend Yield
4.21%
Market Cap
$46.54 billion
Rev. per Employee
$691,395
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/zigman2/quotes/227704127/composite
US : U.S.: Nasdaq
$ 16.20
-0.54 -3.23%
Volume: 1.14M
Jan. 14, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
0.86%
Market Cap
$2.71 billion
Rev. per Employee
N/A
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