US Inflation at Highest Level Since 1990

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Prices paid by American consumers for goods and services have not risen as much since 1990 as in October. However, companies are forced to charge higher prices due to rising raw material prices, staff shortages, and logistical bottlenecks.

 

As a result, costs for daily living rose by 6.2 percent last month compared to the same period last year.

Inflation was therefore much higher than economists polled by the Bloomberg news agency had expected. Excluding the very fluctuating prices for food and energy, inflation rose to 4.2 percent year on year. That is the most substantial increase since 1991.

The price increases are primarily caused by the economic recovery from the corona crisis. Suddenly producers need much more raw materials and more has to be transported. That causes shortages.

For the time being, central banks expect that the sharply increased inflation will be temporary due to the disruptions caused by the pandemic. But pressure is mounting on central bankers to roll back large-scale stimulus measures for the pandemic.

These interventions keep interest rates low, which generally drives inflation. The US Federal Reserve, among others, has begun phasing out major bond-buying programs, pumping tens of billions of dollars into the economy every month.

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