U.S. consumer prices rose 5.7% in November over one year ago, the fastest pace in 39 years, stretching American wallets just in time for holiday shopping, according to new Commerce Department figures.
The November increase followed a 5.1% rise for the 12 months ending in October, continuing a trend of monthly increases far above the 2% inflation target set by the Federal Reserve.
The Commerce Department’s personal consumption expenditures (PCE) index follows a 6.8% increase in the consumer price index (CPI). The PCE price index tracks the actual purchases consumers are making each month while the CPI follows a fixed market basket of goods.
While the CPI is the more widely followed price gauge, the Fed typically relies on the PCE to set interest rates to fight inflation.
Personal incomes rose 0.4% in November, trailing price increases and slightly lower than a 0.5% increase in October. That followed a 1% plunge in September, when federal unemployment benefit expansion came to an end.
The PCE has not risen this fast year-over-year since a 5.8% increase in July 1982.
The Biden administration has been forced to contend with bad press on inflation figures, as they claim to have ‘saved Christmas’ by easing supply chain issues.
‘Good news, we’ve saved Christmas,’ quipped Psaki at the top of her daily briefing with the press on Wednesday.
Earlier Wednesday, she scolded Scrooges and doubters as she announced retail shelves were 90% stocked.
U.S. consumer prices rose 5.7% in November over last November, the fastest pace in 39 years, stretching American wallets just in time for holiday shopping, according to new Commerce Department figures
The Biden administration has been forced to contend with bad press on inflation figures, as they claim to have ‘saved Christmas’ by easing supply chain issues
‘Take that Scrooge, the Grinch and all of the doubters that this could happen,’ she jabbed.
‘And that is because President Biden recognized this challenge early acted as an honest broker to bring key stakeholders together and focused on addressing practical problems across the global supply chain,’ she said.
She pointed to key ‘points of progress,’ including the number of containers sitting on the docks at the ports of LA and Long Beach for over eight days falling by nearly half.
‘The average amount of time containers sit on docks has fallen by a week. The price of shipping a container between Asia and the West Coast has fallen by more than 25 per cent since its peak in September, and as the president also referenced the stocks on shelves is it about 90 per cent – retail stocks on shelves at about 90% inventory,’ on par with where it was pre-pandemic.
Meanwhile, prices at the wholesale level surged by a record 9.6% in November from a year earlier.
The annual gain set a new record, surpassing the old records for 12-month increases of 8.6% set in both September and October. The records on wholesale prices go back to 2010.
And the GDP grew faster than expected in the third quarter of 2021 at 2.3%, up from an estimate of 2.1%, the government announced Wednesday.
Last week, President Biden was forced to admit that inflation inflation was a ‘bump in the road’ – but predicted that prices would drop from current levels.
‘So I think it’s it really is it’s a real bump in the road. It does affect families,’ Biden said in response to a question at a democracy summit held virtually at the White House.
‘You walk into a grocery store and you’re paying more for whatever you’re purchasing,’ he continued.
‘It matters when you’re paying more for gas, although in some states, we’ve dropped the price down below three bucks a gallon,’ Biden said, taking some credit for the decrease after announcing policies including pumping oil from a strategic reserve.
The consumer price index hit a 39-year high of 6.8% on an annual basis in November
‘But the point is, it’s not gone down quickly enough – but I think it will,’ Biden said.
Biden said he recognized that inflation is a ‘real problem.’ But he predicted: ‘I think it’s the peak of the crisis.’
Republicans blame Biden’s big-spending policies for inflation issues, and even Democratic centrist Sen. Joe Manchin tanked the president’s $1.75T Build Back Better plan in large part over inflation concerns.
‘I always think about how do you help the poorest families in our country. Right now, the Democrats’ agenda is hurting the poorest families,’ Sen. Rick Scott (R-Fla.) told host John Catsimatidis on WABC 77 am on Sunday.
‘Everything has gotten more expensive because of the Democrats’ wasteful spending,’ Scott said.
‘A lot of people don’t fully understand the double whammy that Democrat governance is enacting on America as it relates to inflation,’ Sen. Ron Johnson, R-Wisc., added.
‘They are passing all of this deficit spending on a partisan basis [which is] creating a lot more dollars,’ Johnson said, adding that Democrats pay people ‘not to work.’
The administration, however, blames a rapid reopening after the pandemic-triggered recession.
Meanwhile, the Fed has been forced to turn its focus from achieving maximum employment to fighting inflation.
The Federal Reserve announced earlier this month it would speed up its retreat from a bond-buying program it started to boost the economy under the pandemic downturn.
And after months of hesitancy around raising rates, it said it expects to raise interest rates three times next year.
Chairman Jerome Powell, who most of the year has insisted inflation would be ‘transitory,’ said there was a ‘real risk’ that inflation may be ‘more persistent’ than previously thought.
The Fed will shrink its monthly bond purchases at twice the pace it previously announced, likely ending them altogether in March. The bond purchases were intended to hold down long-term rates to aid the economy but are no longer needed with unemployment falling and inflation at a near-40-year high. The accelerated timetable puts the Fed on a path to start raising rates in the first half of next year.