U.S. inflation climbed to a 39-year high in November, as strong consumer demand collided with supply constraints. Overall, the level of consumer prices leapt 6.8% last month from a year earlier, the Labor Department said.
But prices didn’t change at the same rate for all goods and services. A surge in prices for gasoline and other energy sources, along with prices for cars, have been the primary drivers of this year’s inflation burst. Meanwhile, prices for services like education and medical care rose just slightly.
...U.S. inflation climbed to a 39-year high in November, as strong consumer demand collided with supply constraints. Overall, the level of consumer prices leapt 6.8% last month from a year earlier, the Labor Department said.
But prices didn’t change at the same rate for all goods and services. A surge in prices for gasoline and other energy sources, along with prices for cars, have been the primary drivers of this year’s inflation burst. Meanwhile, prices for services like education and medical care rose just slightly.
Much of these differences are the result, in one way or another, of the Covid-19 pandemic. This year’s explosive growth in auto prices is due largely to a semiconductor shortage, which was caused in part by the pandemic but also by trade policy. Much of the rise in food and energy prices comes down to pandemic-related production problems, though also to weather and geopolitical factors. Prices for airline fares and hotels have tended to swing with Covid-19 infection rates, as consumers adjust travel plans to their risk of getting sick.
Still, inflation in prices of many goods and services hit multidecade highs in November, regardless of the differing underlying factors.
The highs signal that price pressures are broadening beyond the goods and services directly affected by Covid and related supply-chain bottlenecks. For example, apparel prices began picking up early in the pandemic, after a long deflationary stint. Housing costs are also climbing, driven by a leap in prices for home energy, furniture and, increasingly, rent.
This broadening of price pressures is important because it could signal that inflation will remain elevated into 2022 and beyond—even after Covid-related disruptions abate.
Economists generally expect price pressure caused by supply constraints to ease next year as sidelined workers return to the labor force, consumer demand for goods calms down and production ramps up. However, those sources of price pressures may be replaced by more persistent ones. For instance, many economists are closely watching the rise in rent, since it makes up nearly one-third of the consumer-price index and tends to influence inflation’s future path.
The rising U.S. inflation rate is triggering a debate about whether the country is entering an inflationary period similar to the 1970s. WSJ’s Jon Hilsenrath looks at what consumers can expect next. The Wall Street Journal Interactive Edition
Write to Gwynn Guilford at gwynn.guilford@wsj.com
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December 17, 2021 at 05:30PM
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Inflation Is Near a 40-Year High. Here’s What It Looks Like. - The Wall Street Journal
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