US Consumer Prices Up 6.2% in Year to October, Keeping Pressure on Economy

WASHINGTON (Sputnik) - US consumer prices rose 6.2% this year to the month of October, the biggest inflation surge in more than 30 years, as surging costs of fuel kept their pressure up on an economy emerging from the near two-year long COVID-19 crisis, Labor Department data showed.

“In October, the Consumer Price Index [CPI] for All Urban Consumers rose 0.9 percent on a seasonally adjusted basis; rising 6.2 percent over the last 12 months,” the Labor Department said in a news release on Wednesday.

The CPI represents a basket of products ranging from gasoline and health care to groceries and rents.

For last month alone, the index rose 0.9%. Both the annual and monthly expansions were the highest since November 1990, according to the Labor Department data.

Economists polled by US media had forecast an yearly growth of 5.9% and monthly rise of 0.6% for the CPI in October.

“The numbers beat the estimates but perhaps by even more than apparent,” economist Adam Button said in a post on ForexLive.

Stripping out volatile energy and food prices, the core reading of the index was up 0.6% against a forecast 0.4%. Annual core inflation ran at 6.2%, similar to the all-inclusive reading.

Fuel oil prices alone soared 12.3% for October, part of a 59.1% increase over the past year. Energy prices on the overall rose 4.8% for the month and are up 30% for the 12-month period. At fuel pumps, a gallon of regular gasoline averages at a seven-year high of $3.41.

The impact of soaring fuel prices on an economy emerging from the effects of the coronavirus pandemic measures was not missed by President Joe Biden, who vowed on Wednesday to strike back against what he described was “price gouging” in the energy sector.

“Inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me,” Biden said in a statement issued by the White House. “I have directed my National Economic Council to pursue means to try to further reduce these costs, and have asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector.”

Reinforcing Biden’s remarks, the Labor Department said in a separate report that real wages after inflation fell 0.5% from September to October, the product of a 0.4% increase in average hourly earnings that was more than offset by the CPI surge.

The US economy shrank by 3.5% for all of 2020 due to the measures imposed to battle the novel coronavirus. Growth this year has been spotty, with an annualized 3.5% expansion in the first quarter, 3.6% in the second and 2% in the third.

The Federal Reserve announced in March that it expected a 6.5% economic expansion for all of 2021 and has not changed its target despite the uneven growth of the past three quarters. The problem for the Federal reserve continues to be inflation as wages and the prices of almost everything have soared from the lows of the pandemic.