Key US inflation measure posts biggest jump since 1990s – .

Key US inflation measure posts biggest jump since 1990s – .

A measure of US inflation closely watched by the Federal Reserve posted its biggest year-on-year jump since the 1990s last month, adding to the pressure on President Joe Biden as his White House scrambles to contain the rise costs.

The Commerce Department’s core personal consumption expenditure index, which excludes volatile food and energy costs, rose 4.1% in October from a year ago.

The jump represents a significant increase from the 3.7% annual increase in September and was in line with consensus expectations.

When energy and food prices are included, the PCE price index rose 5% from October 2020, faster than the 4.4% increase in September. The data was released as part of a report that also showed personal income rose 0.5% in October from the previous month, while consumption rose 1.3%.

Tackling high prices has become a central focus for Biden’s economics team after recent data showed consumer price growth in the United States was increasing at the fastest rate in about three decades, confusing the hopes that inflationary pressures would be short-lived.

This month, the Fed began ending its $ 120 billion monthly asset purchase program, the pace of which suggests it could end in June 2022.

Minutes from the Fed’s November monetary policy committee meeting, also released on Wednesday, showed officials “stressed the importance of maintaining flexibility” as the program is gradually eased, some members of the committee recommending that the central bank tighten its policy more quickly in the face of high inflation.

Some policymakers said at the meeting that they believed a faster cut would put the committee “in a better position” to change policy in light of high inflation. But the minutes by and large did not indicate a committee biased towards an acceleration, “a number of participants” emphasizing a “patient attitude.”

Inflation has accelerated this year alongside a rise in wages, fueled by several rounds of stimulus checks and by employers competing for new workers. Incomes rose 0.5 percent last month, following a 1 percent drop in September.

The latest data comes as claims for unemployment benefits in the United States fell to their lowest weekly level in more than five decades on Wednesday, as filings slowed as the Thanksgiving holiday approached and businesses had difficulty recruiting staff due to labor shortages.

State unemployment offices received 199,000 initial jobless claims on a seasonally adjusted basis last week, up from 270,000 the week before, according to the Labor Department. This brought jobless claims to their lowest level since November 1969, and compares to a previous low of 205,000 in February 2020.

Claims also slipped more than economists had expected, with an average estimate of 260,000 for the week.

“It’s fair to say we didn’t see this coming,” said Mark Hamrick, senior economic analyst at Bankrate.

“Americans are heading into the heart of the holiday season with a reasonable expectation that an already tight labor market will continue to tighten in the months to come,” he added.

Some economists have cautioned against overreading the report, noting that last week’s unadjusted figure for initial claims has risen by 18,000.

As of Nov. 13, 2 million Americans were actively collecting benefits, down from the 2.1 million continuous claims recorded a week earlier. Continuing claims remain above pre-pandemic levels of around 1.7 million.

Layoffs have slowed as employers struggle to hire staff and keep the workers they already have, with record numbers of Americans leaving their jobs in a tight labor market.

Over the past four weeks, the United States has averaged about 252,000 initial requests per week, up from 345,000 in early October.

A separate Census Bureau report released on Wednesday said new orders for durable goods such as cars and kitchen appliances fell 0.5% in October from the previous month as factories continued to tackle the shortage of supplies. parts and labor. Unfilled durable goods orders rose 0.2%, a sign of strong demand.

The US economy grew at an annualized rate of 2.1% in the third quarter, up from an initial estimate of 2%, according to an update from the Bureau of Economic Analysis. The revised figure reaffirmed that growth slowed sharply in the quarter, driven by supply chain bottlenecks.


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