Inflation Hits 39-Year High With CPI up 6.8%

Inflation in the U.S. is at a 39-year high, with the consumer price index (CPI) up 6.8% in November over the previous month in 2020, as consumer demand remains high for goods amid continuing supply chain snarls.

The CPI — which excludes food and energy — rose at its quickest pace since 1982, and inflation surpassed 5% for the sixth consecutive month, the Bureau of Labor Statistics reported in its weekly report on Friday (Dec. 10).

Economists forecasted a CPI increase of 0.7% in November and 6.7% annually after year-over-year inflation rose to 6.2% in October, the highest rate in 30 years.

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There were broad increases in most component indexes, with gasoline, shelter, food, used cars and trucks, and new vehicles among the larger contributors. The energy index rose 3.5% in November and the gasoline index went up 6.1%. The food index increased 0.7% as the index for food at home rose 0.8%.

Prices for vehicles, rent, furniture and airline fares went up last month, and gasoline rose by 6.1% for the second consecutive month. Prices for recreation and communication went down in November.

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“These are frighteningly high inflation numbers, the likes of which we haven’t seen for decades,” Allen Sinai, chief global economist and strategist at Decision Economics, told The Wall Street Journal.

In the current economy, inflation is being driven by a robust economy, which is seen as a positive.

“We have tremendous spending by consumers. A lot of people are getting hired. Demand is huge. Monetary policy remains very easy, and fiscal stimulus has no precedent in history,” Sinai said.

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Close to one in five consumers have not yet rebounded from the economic fallout brought by the pandemic, according to PYMNTS data. Short-term credit and other interventions could be needed to navigate temporary financial barriers.