• CPI rose by 0.8% monthly and 6.8% on an annual basis in November, reported the Labor Department

• The index rose by 0.5% and 4.9%, respectively, excluding food and energy.

The U.S. economy’s rebound from the pandemic has driven the consumer price index (CPI) to rise 6.8% in November on a year-over-year basis, straining the economic recovery and putting pressure on the Federal Reserve.  

The core CPI, excluding food and energy, remained at its highest rate since mid-1991, rising sharply by 0.5% in November, and rising by 4.9% for the same month, from a year earlier. 

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Food prices jumped by 6.1% in the past year while energy prices have soared 33.3% since November 2020, including a 3.5% surge in November. Gasoline prices have risen by 58.1%. The Labor Department said the increases for the food and energy components were the fastest 12-month gains in at least 13 years.

The rising demand for used autos has been bolstered by the price rise in new vehicles due to the global semiconductor-chip shortage, bolstering the prices for the former. , Used car and truck prices, which have contributed to the rising inflation, are up 31.4%, following a 2.5% increase last month.

The index for airline fares turned up in November, rising 4.7% after declining in recent months.  

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The prices for the apparel index rose by 1.3% in November, after being unchanged in October while the index for used cars and trucks rose 2.5% over the month, the same increase as in October. The index for new vehicles rose 1.1% in November after a 1.4% increase in October.

Labor shortages have led to an increase in gross pay by 4.8% over the past year, but real average hourly earnings accounting for inflation declined another 0.4% for November and are down 1.9% for the 12 months, the Labor Department said in a separate release. 

Services inflation has also risen with, services costs excluding energy rising by 0.4% in November and up 3.4% annually, the quickest annual pace April 2007, as per CNBC reports.

Federal Reserve officials continue to attribute the inflation jump to strong consumer demand for goods, supply chain bottlenecks, and the semiconductor shortage. Despite that, the inflation burst has been stronger than what was anticipated.

Fed officials believe that inflation will subside to 2-2.5%, by next year as supply chains normalize and energy prices stabilize. Temporary inflation is a boost for stock markets but if it continues for a longer period, the Fed would be prompted to Fed raise interest rates more, which in turn raises borrowing costs and trims growth to tame price pressures.

Also Read: US economic growth revised marginally upward to 2.1% in third quarter

Picture Credits: Al Jazeera

Inputs: Bureau of Labor Statistics