US inflation jumps 6.8% in November -- fastest rate in 39 years

[mahatmakanejeeves]

Source: Yahoo! Finance

Yahoo Finance

US inflation jumps 6.8% in November -- fastest rate in 39 years

Emily McCormick · Reporter
Fri, December 10, 2021, 8:45 AM

U.S. consumer prices rose at the fastest clip in nearly four decades last month, underscoring the persistently elevated inflationary pressures in the recovering economy.

The Labor Department's Consumer Price Index (CPI) climbed by 6.8% in November compared to last year, marking the fastest annual increase since June 1982. This rate matched consensus economists' estimates, according to Bloomberg data, but accelerated compared to the 6.2% year-over-year rate from the prior month.

Even excluding more volatile food and energy prices, the so-called core CPI rose by 4.9% over last year for the fastest increase in about three decades.

On a month-over-month basis, the CPI rose 0.8% in November, coming in ahead of the 0.7% rise anticipated. This also marked an eighteenth straight month of advances in the index. And excluding food and energy prices, the month-over-month CPI rose 0.5%, matching estimates and coming down by just a tick compared to October's 0.6% increase.

"Inflation is outpacing increases in household income and weighing heavily on consumer confidence, which is at a decade low," Greg McBride, chief financial analyst at Bankrate, wrote in an email on Friday. "It is only a matter of time before it impacts consumer spending in a material way."

Contributions to the CPI last month were broad-based, though price increases in gasoline, shelter, food and both new and used vehicles were some of the largest contributors.

Energy prices overall were up 3.5% in November over October for sixth consecutive monthly gain, as increasing consumer mobility during the reopening pushed up both demand and prices for fuel and other energy products. Gas prices alone were up 6.1% to match October's increase, and the gasoline price index was up about 58% over last year for its largest 12-month increase since 1980.

{snip}

Read more: https://finance.yahoo.com/news/consumer-price-index-posts-biggest-year-over-year-jump-since-1982-in-november-134529314.html

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On an annual basis

There are existing threads in GD about this.

Nov CPI data shows 6.8% inflation, highest in 40 years
https://www.democraticunderground.com/100216131111

Inflation Rises to highest Rate in 39 years
https://www.democraticunderground.com/100216131116

Also see, behind a paywall,

https://www.washingtonpost.com/business/2021/12/10/inflation-november-cpi-fed-biden/

Economy

Prices climbed 6.8% in November compared with last year, largest rise in nearly four decades, as inflation spreads through economy

Over the past few weeks and months, policymakers at the Federal Reserve and White House have backed away from the message that inflation is just temporary

By Rachel Siegel
Today at 8:31 a.m. EST Updated today at 8:52 a.m. EST

Prices rose 6.8 percent in November to a nearly 40-year high, compared with a year ago, as inflation continues to squeeze households and businesses nationwide and complicate the political environment for Congress and the White House.

Data released Friday by the Bureau of Labor Statistics showed that prices rose 0.8 percent in November compared with October, with inflation spreading further throughout the economy, including to areas that had not been previously hurt by the coronavirus pandemic.

The increases were driven by broad-based price hikes in most of the categories tracked, similar to October. Indexes for gasoline, shelter, food, used cars and trucks and new vehicles were among the larger contributors. Airline fares also increased. Also, rents have been climbing, influenced by soaring home prices and supply chain issues limiting construction of new homes. Friday's inflation report showed rent was up 0.4 percent in November compared with the month before.

{snip}

By Rachel Siegel
Rachel Siegel is an economics reporter covering the Federal Reserve. She previously covered breaking news for the Post's financial section and local politics for the Post's Metro desk. Before joining the Post in June 2017, Rachel contributed to The Marshall Project and The Dallas Morning News. Twitter https://twitter.com/rachsieg

[Calista241]

1. This gives Manchin all the excuse he needs to not support the BBB. n/t

[rockfordfile]

9. Should be the opposite. Shows he doesn't give a crap about the American people

[brush]

38. He knows it's a false ruling. Prices were down everywhere last year...

because of covid shutdowns, but he'll use it as an excuse as you say.

[Bengus81]

2. Inflation?? More like GOUGING at every turn..........

[TimeToGo]

6. Truth

[Midnight Writer]

8. Exactly. I would like to see this story tied to corporate profits month by month.

I bet they are both rising in equal measure.

[OneCrazyDiamond]

15. Exactly.

President Biden called for investigations in August....One would think the media would recall, if they were honest.

[TexasBushwhacker]

30. Perhaps, however I think some of it is making up for lost business in 2020

I call it gouging if something is in short supply and prices are hiked during a crisis. Someone charging $15 for a case of bottled water right before a hurricane is gouging.

Now, I know that some parts of the country have very high gas prices, over $3.50 a gallon. But I just filled up in Houston the other day for $2.69. Not as cheap as last year so but not a record high either.

The cost if a gallon of milk has gone up, but how much of that is because of the price if fuel and how much is because stores decided to quit making milk a "loss leader" to get people into the stores.

The funny thing is, I don't recall anyone giving Obama any credit in 2009 when gas dropped from an average of 3.31 in 2008 to an average of $2.40 in 2009. It went up for a while and then it was back down to $2.20 by 2016 (annual average). He didn't get credit then either, and it was back up to $2.79 in 2018 during Trump's term. I didn't hear anything but crickets.

We'll see what it ends up being for an annual average in a couple of months, but over all, when adjusted for inflation, the cost if gas has only varied by about 20 cents a gallon over the last 40 years. Tell the GOP to put that in their pipe and smoke it. I don't hear them bitching at the oil companies that actually set the prices!

https://www.usinflationcalculator.com/gasoline-prices-adjusted-for-inflation/

[Lovie777]

3. And yet the holiday spending will be off the charts . . ..

[captain queeg]

4. I wonder if very many people have one of those adjustable rate mortgages?

They were big back in the 70s. A lot of people got hit really hard. I don’t hear much about them these days. Maybe because the interest rates have stayed so low for so long. Or maybe those type loans were in response to rising inflation? I remember my sisters mortgage went up to 17%. Also, maybe the constant rise in home prices sort of cancel that kind of thing out. They were still advertising adjustable rate loans when I bought my house.

[Farmer-Rick]

10. Over the last 20 years

My fixed rate mortgage went from 8 percent to 2 percent ...just got another refi.

So, I always wondered why anyone really needed a variable interest rate mortgage. I can lower my mortgage regularly and they can't suddenly raise my rates.

Yeah, refi can cost you additional closing costs but in a year, you make that up easily enough with a 2 point drop.

Soooo, not sure what good the adjustable rates do you in the long run.

[cinematicdiversions]

11. With rates as low as they have been you would have to be insane to get one.

Anyone who got an adjustable rate mortgage with rates at 3% gets everything they deserve for being that stupid.

[progree]

18. Adjustable rate mortgages were very big during the years leadinig up to the 2007-8 Housing Bust

when the Fed was in an interest rate increase cycle and ARMs had a much lower interest rate (initially, aka "teaser rates" ) than 30-year-fixed.

Even Fed Chair Alan Greenspan (ughh) was pushing ARMs as a better deal thanks to caps on the annual increases in ARM interest rates (per the ARM's contracts), and then when ARMs get to be more expensive, one can always just refinance.

Trouble was that when housing prices fell, so went much or all of the equity and refinances aren't available for underwater houses (unless one had gobs of cash from a rich uncle for a big down payment)

[jimfields33]

5. Just go to any supermarket and you can see increased prices

It’s a big problem for the poor and even food banks. By the way, this is where they should decide on raises to social security. If they did, the raise would be over 10 percent instead of the pathetic 5.9 percent they are giving. Nope im not on social security but do see how prices have increased.

[karynnj]

16. Inflation rate is different for different people. The BLS has in the past created experimental

indices for different populations. The one take away I have reading more on this is that it is very important to look at more than any one number - concentrating on any populations just barely making it. Relatively small changes in a composite number could be of huge impact to them if they hit a cost of something essential that can not be minimized without pain.

The regular CPI measures the change in price of a "basket" that was supposed to represent what people spend money on. The Bureau of Labor Statistics created an "experimental" index to represent the elderly based on a sample of households containing someone over age 62. https://www.bls.gov/opub/ted/2012/ted_20120302.htm They also had an index for the subset of urban who were "wage earners". There is a chart that shows the weight each component of each index is given.

This explains why each index moves at a different rate than the others. From their data, the share of income spent on both medical and housing is a higher percent for the elderly. The social security increase is based on CPI-W, which actually produced a higher increase this year than CPI-E would have. This was because transportation and food represent higher weights for the wage earners. this also may suggest that the wage segment of the population might be the most hurt by the current inflation which has had higher gas and food prices.

I could not find a simple link on the Nov 2021 CPI-W, but here is a PDF from the BLS, that shows that it was a bit less than one percent higher than the CPI-U. https://www.bls.gov/news.release/pdf/cpi.pdf

looking at any index, it is clear that while it is important to create these metrics - and in fact, alternative metrics - to understand what is happening to the cost of living, the metric will not be "accurate" for each person. Owning a home, even with all its costs, makes the cost of shelter more stable. In some cities, some apartments are price controlled or price stabilized. Alternatively, inflation will look different to those with a daily commute to work of an hour each way and those who have little or no commute.

[cinematicdiversions]

31. Inflation is much higher for renters than home owners

Renters in my area are averaging a 25% increase while homeowners are just sitting idle collecting equity and seeing their debt drop.

Two very different worlds.

[karynnj]

32. Absolutely true

Being able to take a very big expense category and keep it almost constant is a huge difference. This assumes that the homeowner - at least informally - does what condos etc do which is to consider the future capital costs - such as replacing the roof - and "build" a reserve to have that money when needed.

[cinematicdiversions]

34. So much this.

People's mortgages are no half or a third of peoples rent and the get capital gains to boot.

Not to mention if you have a large mortgage inflation is your friend.

[karynnj]

36. Funny you mention that inflation actually works in your favor when you have a mortgage

Back in 1968 or 1969, I was taking one of the introduction economics classes and the professor asked the class to consider which was worse high inflation or high unemployment. Easy question - he then asked the trickier question - Was the current inflation hurting their particular families. As virtually all hands went up, he asked people to consider if their family had a home mortgage. He then explained that, other than people on fixed incomes, it was likely that they were paying back the mortgage with cheaper money - ie the percent of income spent on the mortgage was likely to be less than before.

In my own life, I was helped by inflation because I bought a condo in 1980, with very high interest rates. When the interest rates fell and my balloon mortgage was replaced by a much lower interest rate, I might have doubted the lesson learned in college. However, a few years after that, my husband and II sold that condo for almost double my cost. Why? When the rates fell, housing prices skyrocketed as the amount people could afford to bid skyrocketed. After closing costs, the remaining gain was added to our equity.

This example shows another advantage of owning a home in times of inflation. The mortgage remains the same - any gains all go to the owner. (Of course, if values decrease, the owner loses equity first.)

[mahatmakanejeeves]

7. More links here:

Labor Dept: Consumer Prices Up 6.8% Over Nov 2020
December 10, 2021

[Farmer-Rick]

12. I saw a famous economics professor predict this during the pandemic

It's because oil and gas corporations want to make up for the drop in prices, and decline in profits, during the pandemic. Think rich Saudi Princes and Koch Bros wanting more and more and more. When gas and oil prices increase, everything increases because we import and transport most all of our consumer goods.

Increased transportation costs affects everything in the US because we rarely have local supply chains. This is why we must convert to solar or wind energy so corporations can't strangle us with their greed.

[OneCrazyDiamond]

13. It's only Charles Koch now.

David is pushing up daisies.

[Bernardo de La Paz]

25. I've seen it as friction in the economy and you interestingly highlight opportunism

Wage earners have been opportunistic too and employers have responded with offers of higher wages. However, wages have not kept pace with inflation in 2020, the radio says.

Friction is due to things like supply chain issues, and less in-person service than before. This is at the same time as the economy has been stimulated by widely distributed cash payments.

[yaesu]

14. Those on fixed income will be so screwed by this GRRRREAT economy. nt

[BobTheSubgenius]

17. How many remember the inflation of the late 70s and early 80s?

In my personal economic outlook, I had an 18% mortgage, and between contract raises, and personal 6-month increments towards the full contract from trainee to accredited technologist certification, my wages literally tripled in 5 years. From $5.40 an hour to $16.25.

Even so, that was decent money in those days, and allowed me to buy a house quite easily. Fortunately, the govt. got a handle on it and prevented us from becoming the Weimar republic or Bolivia.

[Bengus81]

20. Anyone remember the Jerry Ford WIN program in 1975?

Whip Inflation Now. They sent out $100 bucks to people--about $523.00 in today's money to go buy stuff. Huh?? Wouldn't create even more inflation Jerry?

[cinematicdiversions]

33. Yeah but you got a WIN button.

[BobTheSubgenius]

37. It's possible that WIN was just a feel-good program and not a serious attempt to curb inflation.

Just a thought.

[Deminpenn]

21. Yep

Had a 13% mortgage.

[Calista241]

39. The problem is mortgages have been sub-4% for so long it's what the market expects.

People will make the party in power pay if mortgages go up and stay above 6%.

[Bernardo de La Paz]

19. Rate did NOT jump 6.8% in November. The rate WAS (IS) 6.8% on an ANNUALIZED basis

Scare headlines scare consumers into yet more polarized outrage for profit of media.

Prices actually rose 0.8% in November. That is the RATE. The rate did not jump in November by 0.8% or 6.8%. 0.8% is the rate, not the jump. 6.8% is the annualized rate or the year on year change, not the jump.

Prices are not inflation.
Inflation is the rate of change of prices.
Inflation is the calculus derivative of price just like velocity is the derivative of distance.

The (annualized?, year on year?) rate in October was 6.2%. So it would be more correct to say that the rate jumped 0.6%: from 6.2% to 6.8%. That would be an acceleration of inflation.

Price . . . . . . . . Distance travelled
Inflation . . . . . . . Speed (Velocity)
Jump in rate . . . . Acceleration

(The annualized rate or year on year rate: not sure which calculation they used exactly and how one gets from 0.8% to 6.8% if that is annualized).



Dishonest journalism includes dishonest headlines.

[progree]

22. At least she didn't use "another", e.g. "Inflation jumps another 6.8% in November" (◠‿◠) /nt

[MarcA]

23. It's like the difference in Velocity and Acceleration. n/t

[Bernardo de La Paz]

24. Exactly. I was editing my post to include that as you were writing yours :)

[progree]

26. CPI Data and increases for the month, for the 12 months ...

https://data.bls.gov/timeseries/CUSR0000SA0

Monthly CPI Data:

Year   January  February etc. etc.
2020 258.687 258.824 257.989 256.192 255.942 257.282 258.604 259.511 260.149 260.462 260.927 261.560

2021 262.231 263.161 264.793 266.832 268.551 270.981 272.265 273.012 274.138 276.724 278.880

So from October 2021 to November 2021, prices increased from 276.724 to 278.880 which is 0.779% increase, rounds to 0.8% increase as reported.

That is not an annual or annualized rate. It is one month's increase. Annualizing that one month change: (1.00779^12 - 1)*100% = 9.76%

From November 2020 to November 2021, prices increased from 260.927 to 278.880, a 6.88% increase. That should round to 6.9%, I don't know why Yahoo Finance is reporting 6.8% (the BLS reports 6.8% too as the "unadjusted 12-mos. ended Nov 2021" )
https://www.bls.gov/news.release/cpi.nr0.htm

Addendum: I noticed the pre-pandemic November 2019 CPI is 257.989. The November 2021 CPI is 278.880, That's a 8.0976% increase over 2 years, which annualizes to (1.080976^(1/2) - 1)*100% = 3.97%/year (4.0%/year rounded)

[Bernardo de La Paz]

27. Thank you! So, year-to-year change. Shows why sometimes looking a level deeper at data is needed

And my Title line was less than perfect too!

But I am not a journalist and I don't play one on TV.

[progree]

28. De Nada 😂 I also just added a look at the 2 year inflation rate: Nov '21 over Nov '19: 4.0%

annualized. Some of the big inflation numbers we're seeing in the year-over-year numbers is because of a somewhat depressed base in 2020 (in 2020 the CPI fell for 3 straight months).

[Bernardo de La Paz]

29. Yes, for years to come 2019 will be a benchmark year, not 2020. . . . nt

[progree]

35. Real average hourly earnings of production and non-supervisory workers

"real" in BLS parlance means inflation-adjusted. See link for a nice table going back decades. And for the graph. It's not a pretty graph

https://data.bls.gov/timeseries/CES0500000032
AVERAGE HOURLY EARNINGS OF PRODUCTION AND NONSUPERVISORY EMPLOYEES, 1982-84 DOLLARS
Seasonally Adjusted
Year   Jan.  Feb. Mar. etc.
2019 9.40 9.41 9.39 9.37 9.41 9.43 9.44 9.47 9.48 9.47 9.47 9.47
2020 9.47 9.50 9.61 10.09 10.04 9.89 9.79 9.80 9.77 9.77 9.79 9.85
2021 9.82 9.81 9.76 9.75 9.74 9.68 9.69 9.71 9.73 9.67 9.63
The last 2 numbers are preliminary

There is a big jump at the beginning of the pandemic as the first hired (and therefore relatively lower wage) become the first fired. After the big jump in March and April, there is a slow decline thereafter, but as of Nov 2021, it's still higher than Nov 2019, the last pre-pandemic November.

Addendum: I don't want to read "yeah, but prices keep going up" and "who can live on $9.63/hour"? AGAIN, these are inflation-adjusted by the CPI. And they are 1982-1984 dollars.

Here are the amounts in plain old ordinary dollars (no inflation adjustment)
http://data.bls.gov/timeseries/CES0500000008

2019: 23.12 23.19 23.28 23.33 23.42 23.47 23.54 23.64 23.69 23.77 23.81 23.84
2020: 23.88 23.96 24.15 25.16 25.01 24.77 24.67 24.81 24.79 24.83 24.93 25.15
2021: 25.14 25.21 25.27 25.45 25.60 25.72 25.86 26.01 26.16 26.28 26.40