By John Meyer, business consultant – Eurasia Business News, November 12, 2021
Consumer prices rose 0.9% in October, up 6.2% year-on-year, according to figures released on November 10. A record level for thirty years, which will stir up political debates and put pressure on the monetary policy of the US Federal Reserve.
The US Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in October on a seasonally adjusted basis after rising 0.4 percent in September, the U.S. Bureau of Labor Statistics reported on November 10. Over the last 12 months, the all items index increased 6.2 percent before seasonal adjustment.
While inflation was concentrated in a few sectors six months ago, it is now widespread in most consumer products, points out the US Bureau of Labor Statistics: energy and food, but also housing, used vehicles and new cars.
American families who are going back to big cities after leaving for countryside and smaller towns during the Covid-19 pandemics are now struggling to find a house or an apartment. Rent prices have skyrocketted, like the housing prices.
According to research by the Federal Reserve Bank of St. Louis, the median sales price of sold homes was $ 384,600 in Q4 2019, to be now $ 453,300 in Q3 2021. This is a growth by 17%.
The overall jump in inflation has been driven, in part, by surging transportation costs. Gasoline prices in October jumped nearly 50% from a year ago. The 9.8% leap in new vehicle prices marked the sharpest increase since 1975, reported the Wall Street Journal.
But the US Federal Reserve continues to believe that these figures reflect “factors that should be transitory.”
Investors are now seeking hedge against this strong inflation. The price of gold hit 1,862 $ on November 12, growing by 2.45% in one week.
Since the start of the coronavirus crisis, the Fed has injected the markets with 120 billion US dollars in liquidity each month, through the purchase of 80 billion treasury bills and 40 billion MBS. This made it possible to fluidify credit and push rates down to help the economic recovery. Now that the American economic recovery is on track, the US Central bank intends to start putting away its anti-crisis tools, but its officials want, before launching the movement, to be certain that the recovery is lasting.
Europe faces the same difficulties. The rate of annual inflation of the euro area hit 4.1% in October 2021, against 3.4% in September and 3.0% in August, according to a flash estimate issued by Eurostat, the statistical office of the European Union.
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