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Inflation Reaches 30-Year High

La inflación alcanza niveles no vistos en 30 años bajo el Gobierno de Biden


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The year-on-year rate of inflation soared in October to 6.2%, the highest record for consumer prices in this country since 1990.

Consumer prices rose nine tenths in a month, the Bureau of Labor Statistics reported Wednesday.

This is the fifth consecutive month in which year-on-year inflation is above 5%.

Last month’s figure is of particular concern, as it shows a more generalized rise than in previous months, which had been focused on specific sectors.

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Excluding food and fuel prices, which are the most volatile, core inflation in October was 0.6%, with an annual rate of 4.6%.

Energy prices rose by 4.8 % in October and food prices rose by 0.9 %, according to the government report.

In particular, prices consumers pay for gasoline rose 6.1% last month and are up 49.6% in a year.

For Jason Furman, Harvard economics professor and researcher at the Peterson Institute for International Economies, the 0.9% monthly price increase in October is an “extremely high headline.”

“Moreover, inflation is spreading (…) even taking out cars and pandemic-related services.” he said on his Twitter account.

The FED’s response

Wednesday’s data adds pressure to the central bank, which has already announced that it will begin to gradually reduce the multi-billion dollar bond-buying program starting this month.

Last week. the FED left interest rates unchanged in the range between 0% and 0.25% and announced the start of the tapering of liquidity injections by $15 billion per month.

With this decision the volume of monthly bond purchases, currently at $120 billion, would be progressively reduced with the aim of completely ending the program by mid-2022.

“If inflation does not decline, the FED may need to taper its bond-buying program at a more substantial pace and raise interest rates, which could hurt financial assets,” warned Nancy Davis, a director at investment fund Quadratic Capital Management.

Despite conceding that it is more persistent than anticipated a few months ago, FED Chairman Jerome Powell keeps repeating that high inflation is due to factors that are “transitory”, such as problems in global supply chains and “strong demand.”

According to him, the rise in prices will begin “to moderate in the second or third quarter of 2022.”

In September, the Fed lowered its economic growth forecast to 5.9% this year, compared to the 7% estimated three months ago; while it slightly raised its inflation forecast from 3.4% to 4.2% by the end of 2021, numbers that have already been exceeded by current inflation.