Consumer prices in the U.S. rose last month to their highest level in nearly 40 years. It’s another sign that rapidly rising inflation, which continues to squeeze away purchasing power, has been misjudged by policymakers. This will now put tremendous pressure on the Federal Reserve to tighten policy.
The Department of Labor today released the Consumer Price Index (CPI), which rose 6.8% year-on-year in November and 0.8% from the previous month of October.
Core CPI (excluding food and energy prices) rose by 4.9% year on year, reaching its highest level in 30 years.
The data reinforced expectations that the Fed will decide to accelerate its bond-buying program at its meeting next week. Meanwhile, pressure is mounting on central banks and policymakers around the world to fight rising inflation as workers need to spend more and more money on food and fuel.
The Fed is expected to start raising interest rates in the middle of next year, while inflation numbers are expected to climb closer to the 10% mark in 2022.