Saturday, December 11, 2021

The profligate buying off of all our institutions, via crazed money printing, is coming home to roost. WSJ


U.S. Inflation Hit a 39-Year High in November

Consumer prices rose 0.8% in the month and 6.8% from a year ago

Strong demand for goods such as appliances has driven much of the inflation surge.

Consumer-price index, percent change froma year earlierSource: Labor Department

The Labor Department said the consumer-price index—which measures what consumers pay for goods and services—rose 6.8% in November from the same month a year ago. That was the fastest pace since 1982 and the sixth straight month in which inflation topped 5%.

The so-called core price index, which excludes the often-volatile categories of food and energy, climbed 4.9% in November from a year earlier. That was a sharper increase than October’s 4.6% rise, and the highest rate since 1991.

The increase in prices for new vehicles, which came in at 11.1% in November, was the largest on record, as were those for men’s apparel and living room, kitchen and dining room furniture. A 7.9% surge in fast-food restaurant prices last month marked the sharpest on record too.

The steady rise in restaurant prices during the past few months is a sign of pass-through from wages into higher prices, economists say. That dynamic is increasingly showing up in other industries. Wages tracked by the Atlanta Fed climbed 4.3% in November, up from 4.1% in October and the highest since 2007.

Some energy prices showed signs of easing—in part because of fear in the financial markets that the Omicron variant of Covid-19 could slow growth. But gasoline rose at a 6.1% monthly rate for the second straight month.

The November prices trend came before the emergence of the Omicron variant, which poses a new threat from a pandemic that is well into its second year. But the sharp price increases are the result of a booming economy that has developed imbalances in supply and demand as the U.S. continues to recover from the pandemic.

“We have tremendous spending by consumers. A lot of people are getting hired. Demand is huge,” Allen Sinai, chief global economist and strategist at Decision Economics, Inc. said. He added that higher-than-expected inflation implies a needed pullback in fiscal and monetary stimulus. “Even after doing that, the economy should still be in super shape producing growth rates and earnings not seen in decades.”

On a monthly basis, the CPI increased a seasonally adjusted 0.8% in November from the prior month, about the same as October’s 0.9% increase.

The latest strong inflation report strengthens the case for Federal Reserve officials to commit to hastening the wind-down of their stimulus efforts, paving the way to raise interest rates in the spring to curb inflation.


Bill said...

Inflation is actually at an all time high. Remember they keep changing the formula. If you use the same formula, as in the 80's, the current rate is higher than it was back then.

Anonymous said...

I've heard a few people saying real inflation is closer to 11% when you include the housing situation. I've not had the chance to verify this personally, so verify this...but it certainly seems to make sense.