US inflation surges to near-40 year high, testing Biden

US President Joe Biden acknowledged that high inflation was "a bump in the road" but said the data did not reflect the latest economic dynamics

US President Joe Biden acknowledged that high inflation was "a bump in the road" but said the data did not reflect the latest economic dynamics

US consumer prices rose last month at a rate not seen in nearly 40 years, the government reported Friday, underscoring how inflation threatens the world's largest economy and President Joe Biden's public support.

The Labor Department's consumer price index (CPI) jumped 6.8 percent compared to November of last year, its biggest gain since June 1982 as prices for gasoline, used cars, rent, food and other goods continued to climb.

Biden countered that the report did not encompass recent declines in prices of energy and used cars -- two main drivers of the high inflation readings seen this year -- and that supply chain issues which have driven prices higher are being resolved.

He added that "price and cost increase are slowing, although not as quickly as we'd like," but later acknowledged inflation was "a real bump in the road."

Gasoline prices rose 6.1 percent last month, while prices of used cars climbed 2.5 percent, according to the CPI report.

The month-on-month rate of consumer price inflation also decelerated slightly to 0.8 percent, but that was nonetheless higher than expected.

Biden made fighting inflation a top priority last month after the CPI in October saw its sharpest annual increase since 1990.

A variety of factors have caused the price increases, including shortages of components and workers, high demand for goods and rebounds in industries that were disrupted by the Covid-19 pandemic but are now recovering with the help of vaccines.

Mickey Levy, chief economist covering the Americas and Asia at Berenberg Capital Markets, pointed to the supply bottlenecks, the Federal Reserve's low interest rate policies and pandemic recovery legislation enacted under Biden and his Republican predecessor Donald Trump.

The White House has argued that its actions helped get the country back on its feet after last year's economic collapse, citing steady declines in the unemployment rate and the number of people filing for jobless assistance.

Some of the high inflation readings have stemmed from price increases for commodities like oil, which went negative last year at the nadir of the downturn but have risen as worldwide demand recovered in 2021.

Economist Joel Naroff said the data confirmed that Washington policymakers have misread the persistence of the price burst that accompanied the economy's vaccine-driven reopening, and while inflation may decrease in the months to come, Americans are feeling real pain now.

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