Inflation at 39-Year High as Consumer Prices Rise 6.8 Percent in November

The United States is experiencing its highest annual inflation rate in 39 years as costs continue to surge.

The Department of Labor reported on Friday that consumer prices around the country rose 6.8 percent in November, a 0.8 percent increase from October. It also marks the highest year-over-year increase in prices since 1982, which saw June end with a 7.1 percent inflation rate.

Core prices are also up by 4.9 percent, which is the biggest increase in that area since 1991, according to the report. Low-income families have been especially affected by the jump, as it is making everyday necessities seem out of reach.

There are multiple factors that have been attributed to the increasing inflation in almost all areas of the economy, including COVID-related shutdowns and supply shortages amid increasing customer demand, the Associated Press said. Worker shortages have also contributed to rising prices. As a result of the shortages, many companies have increased the prices of their products in order to make up for higher labor costs.

President Joe Biden has been attempting to curb the inflation rate. In November, he released 50 million barrels of oil from the U.S. strategic petroleum reserve in an attempt to decrease gas prices. As a result, oil prices have slowly begun decreasing, leading to slightly lower prices at the pump.

LA Shopper
The Department of Labor reported on Friday that consumer prices around the country rose 6.8 percent in November as the U.S. is experiencing its highest annual inflation rate in 39 years. Above, shoppers wearing protective face masks visit Hollywood Boulevard in Hollywood, California, on December 1, 2021. Photo by Robyn Beck/AFP via Getty Images

The persistence of high inflation has surprised the Fed, whose chair, Jerome Powell, had for months characterized inflation as only "transitory," a short-term consequence of bottlenecked supply chains. Two weeks ago, though, Powell signaled a shift, implicitly acknowledging that high inflation has endured longer than he expected. He suggested that the Fed will likely act more quickly to phase out its ultra-low- rate policies than it had previously planned.

Driving much of the inflation last month were energy prices, particularly gasoline pump prices, which are up a dizzying 58.1 percent from a year ago. The costs of housing, food, new and used cars, airline tickets, clothing and household furnishings were also big contributors to the November price surge.

Some economists are holding out hope that inflation will peak in the coming months and then gradually ease and provide some relief for consumers. They note that supply shortages in some industries have begun to gradually ease. And while higher energy costs will continue to burden consumers in the coming months, Americans will likely be spared from earlier forecasts that energy prices would reach record highs over the winter.

What's more, the emergence of the omicron variant of the coronavirus has renewed the prospect of more canceled or postponed travel and fewer restaurant meals and shopping trips. All of that, if it happened, would slow consumer and business spending and potentially restrain inflation.

Still, analysts caution that unexpected developments, including heavy winter storms, with potentially increased demand for energy, could send energy prices surging again.

And analysts cautioned that easing overall inflation pressures will depend on further progress in normalizing global supply chains. Senior White House officials have said they believe that a series of actions that the administration has taken, from boosting the processing of cargo from the ports of Los Angeles and Long Beach to the release of crude oil from the petroleum reserve, would help defuse inflation pressures.

Some outside economists have begun to echo that view.

"I think November will be the worst of it, and going forward we will see steady improvement," said Mark Zandi, chief economist at Moody's Analytics. "As the Delta wave of COVID has receded and supply chains start to repair themselves, we will start to see production and shipments improve."

Zandi said he believes that inflation will begin improving with the December price report and that by this time next year, annual inflation will be back down to around 3 percent, closer to the Fed's 2 percent target.

For now, though, against the backdrop of persistent high inflation, the Fed is expected to announce after it meets next week an acceleration reduction in its monthly bond purchases. Those purchases have been intended to lower long-term borrowing costs.

Doing so would put the Fed on a path to begin raising its key short-term interest rate as early as the first half of next year. That rate has been pegged at nearly zero since March 2020, when the coronavirus sent the economy into a deep recession.

The Associated Press contributed to this report.

Gas Prices
Prices for U.S. consumers jumped 6.8 percent in November compared with a year earlier as surging costs for food, energy, housing and other items left Americans enduring their highest annual inflation rate since 1982. Above, gasoline prices are displayed at a station in Philadelphia on November 17, 2021. AP Photo/Matt Rourke