Inflation in the US reaches 6.8% in November, the worst figure in almost 40 years | Economy

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Gas station in Alexandria, Virginia, on November 23.  Rising energy prices have contributed to rising inflation.
Gas station in Alexandria, Virginia, on November 23. Rising energy prices have contributed to rising inflation.ANDREW CABALLERO-REYNOLDS (AFP)

A week after the Federal Reserve stripped inflation from the qualifier as transitory, data from the Consumer Price Index (CPI) released this Friday confirm that inflation in the US has become persistent, at least in the short term. The prices of used cars, rents and rentals, the bill for furniture or food have continued to rise in November, reaching an increase of 6.8% year-on-year, significantly higher than the 6.2% registered in October and one tenth of a percentage point. above the forecast by Reuters and Bloomberg analysts (6.7%). The November CPI has thus once again broken negative records: it is the highest since 1982, when Republican Ronald Reagan was president.

Inflation has accelerated as the crisis in the supply chain and strong demand have fueled price increases. The overheating of the economy complicates the economic recovery plans of President Joe Biden, who plans to carry out his social spending program in Congress at Christmas, and puts added pressure on the Federal Reserve, which at next week’s meeting may Consider accelerating the reduction of bond purchases.

Core inflation, which excludes volatile food and energy prices, rose 0.5% in November, which is in line with the average forecast. In year-on-year terms, the so-called basic CPI reached 4.9% last month after rising 4.6% in October.

In the measurement by months, the increase in November was 0.8%, a slight improvement compared to the 0.9% observed in October. Although the year-on-year measure points to worryingly high inflation, the month-over-month slowdown suggests that inflation could peak in the fall, according to the portal’s emergency analysis Business Insider.

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Data from the Bureau of Labor Statistics released this Friday demonstrate the impact of the supply chain crisis on bills paid by businesses and consumers across the country. Port bottlenecks and shortages of goods eased somewhat in November, but continued to put significant strain on the recovery. The beginning of the spending of the Christmas season and Black Friday – the commercial day par excellence of the year – redoubled the intensity of the demand, compared to a still limited supply.

Another determining factor to explain the increase in prices is the energy crisis. November also saw a spike in gas prices in the US, before moderating in December. The national average reached $ 3.43 per gallon (3.7 liters) early last month, though it has since dropped slightly, to 3.35. A prolonged downtrend could drag headline inflation lower, pending confirmation of whether or not the omicron variant of covid-19 slows travel demand.

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The release of 50 million barrels of oil from the US energy reserves, announced by President Biden, is precisely aimed at lowering the price of energy for consumers, both for automotive and for domestic use.

As inflation jeopardizes Biden’s public spending plans and clouds the electoral hopes of Democrats in the 2022 midterm elections, data on Friday suggests that the party’s immediate and medium-term horizons are getting tougher. Red-hot inflation gives Republicans an argument to link the massive spending planned by the Biden Administration to rising prices.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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