Consumer prices in the United States rose in November at a rate not seen in nearly 40 years. The price increase amounted to 6.8% compared to November 2020, after + 6.2% in October, according to the consumer price index (CPI) published Friday by the Department of Labor. This is the largest increase on record since June 1982.
Americans continued to pay more for everything in the past month: from food, to clothing, cars, gasoline, electronics, plane tickets and restaurants.
“The figures this morning confirm what every American family already knows: inflation is out of control under the leadership of the Democrats,” reacted the powerful Republican leader in the Senate Mitch McConnell, in a statement.
Slowdown not fast enough
The host of the White House preferred to highlight the current price trend rather than that of last month. “The developments in the weeks following the collection of data for the last month show that the increase in prices and costs is slowing,” he said in a statement while acknowledging that they were not slowing down ” as quickly as we would like ”.
As last month, strong consumer demand has again come up against supply problems linked to the pandemic and it is the prices of the energy sector that have increased the most over one year (+ 33.3%) .
Joe Biden did not fail to point out that countries around the world were facing an inflationary surge linked to the pandemic.
Excluding the volatile energy and food sectors, inflation also remained strong (+ 4.9%).
New car prices jump
To prepare minds for bad figures, Joe Biden issued a press release on Thursday announcing prices still high in November. But he was quick to point out that the report “does not reflect today’s reality”. On Friday, the president once again highlights the recent drop in the prices of energy, gasoline, natural gas, and used car prices.
Last month, the prices of new cars jumped 11.1%, those of used cars by 31.4%. What arouse discontent among Americans who are particularly fond of this mode of transport.
Compared to the previous month, the monthly price increase slowed slightly: + 0.8% against + 0.9% in October. But it is higher than analysts’ projections (+ 0.6%), a sign that inflation is persistent. In addition, the investigation was carried out before the emergence of the Omicron variant of Covid-19, which poses a new threat to the US and global economy.
Some economists anticipate an exacerbation of the logistical problems linked to new sources of contamination around the world, which could accentuate the inflationary surge. After arguing that inflation was “temporary” and linked to the economic recovery from the historic 2020 recession caused by the Covid-19 pandemic, the Biden administration and the US central bank came to admit that inflation was more durable than expected.
Republican critics, and Democrats
For the Republican opposition, Joe Biden’s economic policy of injecting trillions of dollars into the economy has contributed to the inflationary surge, which his administration denies.
Republicans warn of the “Build Back Better” plan which they believe could fuel inflation even further.
Joe Biden, who faces criticism on this point even in his Democratic camp, once again challenged this approach on Friday. “The difficulty of rising prices shows that it is important for Congress to adopt without delay my ‘Build Back Better’ plan, which will reduce the cost of health care, prescription drugs, child care for families. ‘children, etc.’, he hammered.
The Biden administration also argues that the estimated $ 1.8 trillion in spending will be spread over a decade and not all at once as was the case with emergency plans adopted in the midst of a pandemic.
This report is published a few days before the meeting of the Federal Reserve (Fed) and should consolidate the institution in its intention to accelerate the reduction of its monetary assistance program to the economy to proceed to an increase in prices. key rates in an effort to contain inflation.
The Fed is currently forecasting a deceleration in inflation in the second half of 2022.
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