The Consumer Price Index released by the Bureau of Labor Statistics on Wednesday rose 6.2% in October from a year ago – the fastest annual pace since 1990 and a sharp increase from levels of September by 5.4%.
Month-over-month price increases accelerated sharply, with a 0.9 percent jump signaled in a significant recovery from August through September, when prices rose 0.4 percent.
After volatiles such as food and energy were eliminated, prices rose 0.6% for the month, well above the previous reading of 0.2%. On an annual basis, these costs have increased by 4.6 percent. In September, it was 4%.
The data reinforces the view that inflationary pressures are proving to be much more persistent than initially expected – a growing risk the Federal Reserve acknowledged last week when it announced plans to start cutting its purchasing program in assets of $ 120 billion later this month.
While costs have moderated in recent months in some sectors most sensitive to the economic reopening of the coronavirus pandemic, including used cars and travel costs, prices are rising elsewhere.
Rents and other housing-related costs, which account for around a third of the CPI, have risen steadily in recent months, while some services also become more expensive as employers raise wages to cope with a severe labor shortage. -work.
Worsening mismatches between supply and demand have also pushed up energy prices, and pernicious bottlenecks have made many goods, from household items to new cars, considerably more expensive.
Senior Fed officials – including President Jay Powell and Vice President Richard Clarida – still argue that current imbalances will eventually subside as global supply chains and labor markets grow. will adjust, meaning that inflation will eventually turn out to be “transient” and subside over time.
But Powell and Clarida have indicated that the Fed is monitoring the situation closely and stands ready to use central bank tools if necessary.
Short-term U.S. government bond yields, which are most sensitive to changes in monetary policy, surged after the report, with the two-year Treasury trading around 0.06 percentage point higher at 0.48%. The three-year note jumped 0.07 percentage point to 0.8%, and the benchmark 10-year bond yields climbed 0.04 percentage point to trade around 1.48 %.