U.S. Consumer Prices Show Fastest Annual Growth In Over 30 Years

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The Labor Department released a highly anticipated report on Wednesday showing U.S. consumer prices increased by more than expected in the month of October, lifting the annual rate of price growth to its highest level in over thirty years.

The report said the consumer price index jumped by 0.9 percent in October after rising by 0.4 percent in September. Economists had expected consumer prices to climb by 0.6 percent.

The bigger than expected increase in consumer prices was partly due to a surge in energy prices, which spiked by 4.8 percent in October after jumping by 1.3 percent in September. Gasoline prices soared by 6.1 percent.

Food prices also continued to see notable growth in October, advancing by 0.9 percent for the second consecutive month.

Excluding the higher prices for food and energy, core consumer prices still increased by 0.6 percent in October after inching up by 0.2 percent in September. Core prices were expected to rise by 0.4 percent.

The core price growth partly reflected notable increases in prices for shelter, used cars and trucks, and new vehicles.

Prices for medical care, household furnishing and operations, and recreation also rose, while prices for airline fares and alcoholic beverages were among the few to decline.

Reflecting the bigger than expected monthly increase in prices, the Labor Department also said the annual rate of growth in consumer prices accelerated to 6.2 percent in October from 5.4 percent in September, reaching the highest level since November of 1990.

The annual rate of growth in core prices also accelerated to 4.6 percent from 4.0 percent, reflecting the biggest jump in prices since August of 1991.

"Strong demand and constrained supply will drive inflation higher in early 2022 which could lead the Fed to raise rates earlier than our December 2022 forecast," said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.

She added, "If inflation continues to outstrip expectations, the Fed might also accelerate its QE tapering, but for now we foresee consistent tapering through mid-2022."

A separate report released by the Labor Department on Tuesday showed U.S. producer prices increased by slightly more than anticipated in the month of October.

The Labor Department said its producer price index for final demand advanced by 0.6 percent in October after climbing by 0.5 percent in September. Economists had expected another 0.5 percent increase.

Core producer prices, which exclude prices for food, energy, and trade services, rose by 0.4 percent in October after inching up by 0.1 percent in September. Core prices were expected to edge up by 0.2 percent.

Compared to the same month a year ago, producer prices in October were up by 8.6 percent, unchanged from the previous month.

Meanwhile, the report said the annual rate of growth in core producer prices accelerated to 6.2 percent from 5.9 percent.

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