Consumer prices surged at the fastest pace in more than three decades in October as fuel costs picked up, supply chains remained under pressure and rents moved higher — worrying news for economic policymakers at the Federal Reserve and for the Biden White House.
Overall prices rose 6.2 percent over the past 12 months, the fastest pace since 1990, and inflation began to accelerate again on a monthly basis.
Prices rose across the board in October, at deli counters and restaurants and car dealerships. The acceleration is an unwelcome development for the Biden administration, which had continually pointed out that while price gains were faster than usual, they were slowing down from rapid summertime readings. It is also a policy challenge for the Fed, which is charged with maintaining stable prices and fostering maximum employment.
Inflation rates remain far faster than the 2 percent annual gains the Fed aims for on average over time. While the Fed sets its goal using a separate measure of inflation — the Personal Consumption Expenditures index — that, too, has picked up sharply this year. The C.P.I. reports come out faster, and help feed into the central bank’s favored gauge, so they are closely watched by economists and Wall Street investors.
expressing concern about the impact more federal spending could have on inflation.
Part of the dilemma is that inflation is not moderating, as many economists had expected it would by the end of 2021. Instead, it jumped to 0.9 percent last month from September, a Labor Department report showed, faster than the prior month’s increase of 0.4 percent and well above economists’ expectations. So-called core prices, which strip out products like food and fuel, also climbed more quickly.
Administration and Fed officials alike have maintained that rapid inflation should eventually fade. But they have had to revise how quickly that might happen: Supply chains remain badly snarled, and demand for goods is holding up and helping to fuel higher prices. As wages begin to rise in many sectors amid labor shortages, there are reasons to expect that some businesses might charge their customers more to cover climbing worker costs. October’s data did nothing to alleviate that growing sense of unease.
Shortages of used and new cars have sent prices skyrocketing, supply chain issues have made furniture costlier, labor shortages are raising some service-industry price tags, and rents are rising after a weak 2020. In the headline data, food and fuel prices have picked up sharply.