The October CPI, or consumer price index, rose to 6.2% from 2020 levels. This means that inflation across a wide range of everyday products rose to its highest levels in 30 years. This is according to a Department of Labor report issued Wednesday.
October CPI Rose 6.2%
The October CPI grew by 6.2% compared to October 2020. The CPI monitors the price of goods ranging from fuel to rentals to health care to groceries.
Dow Jones expected the rise in CPI rates to settle at 5.9% Instead, actual numbers posted 0.3% higher. This is the highest rate recorded since 1990. Specifically, the CP increased 0.9% on a monthly basis.
Removing food and energy prices, which are fluctuating wildly due to supply disruptions, the October CPI for core items rose 0.6%. This exceeded expert estimates of 0.4%.
Annual core inflation ran 0.6% higher compared to expectations of 4%. This is also the highest recorded rate since August 1991.
Fuel, Food Prices Soar As October CPI Rises
Prices of almost everything rose again during the past month. Fuel oil prices rampaged, ending up 12.3% higher compared to September. For 2021 alone, fuel prices already went up by nearly 60%.
As a result, overall energy prices soared 4.8% in October. This means it’s up by 30% over the past 12 months. Used vehicle prices are also spiraling upward.
Second-hand car prices shot up 2.5% for the month and 26.4% for the year. Meanwhile, new vehicle prices rose by 1.4%. This means new car prices are now up 9.8% this year.
Meanwhile, food prices also ballooned. For the month, food prices rose 0.9% on average and 5.3% for the year. In particular, meat, poultry, fish, and eggs went up by 1.7% for the month and 11.9% for the year.
Inflation is Wiping Out Gains From Pay Increases
The continued rise in prices is wiping out gains made by workers. Many major companies are raising their minimum way rates in order to attract or retain workers.
However, spiraling costs of goods meant that worker pay raises will only cover added expenses. In a separate report, Labor said that real wages after inflation fell 0.5% from September to October. The increases in hourly pay weren’t able to match the rising cost of goods.
Shelter costs or rent, which account for 33% of CPI computations, increased by half a percent in October. Year over year, the increase now stands at 3.5%.
This alarming rate should make federal policymakers take notice. Inflation isn’t as transitory as many government experts claim.
“Inflation is clearly getting worse before it gets better, while the significant rise in shelter prices is adding to concerning evidence of a broadening in inflation pressures,” said Seema Shah. She is the chief strategist at Principal Global Investors.
However, Fed Officials Insist Inflation Remains a Temporary Thing
However, senior government finance officials insist that the October CPI increase reflects the temporary nature of inflation.
According to Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, inflation is still tied to COVID-19.
Even as the two acknowledged that inflation is higher and more persistent, they expect things to return to normal by next year.
Watch the CNBC Television video reporting that the CPI jumps 6.2% in October, the highest level in more than 30 years:
What do you think about the rising CPI rates over the past few months? Should the federal government do something about runaway inflation?
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