Year-on-year U.S. inflation reached its highest since October 1990, mainly driven by higher energy prices. Official consumer price figures also beat expectations and left the government in an awkward position.
President Joe Biden acknowledged that inflation is driven by energy prices and reversing it “is a priority.” The government is analyzing measures to limit the rise in oil and fuel prices but so far it has not confirmed any.
The Labor Department published inflation data for October, with the consumer price index showing a monthly rise of 0.9%, exceeding market expectations and higher than 0.4% in September. With this rise, inflation in the last twelve months climbed to 6.2% –the largest year-on-year price increase recorded since December 1990.
In a statement released Wednesday, Biden said inflation “hurts the pockets of Americans, and reversing this trend is a priority for me.” The president added that “most of the price increase in this report is due to rising energy costs.”
The inflation data for October left the government in an uncomfortable situation. Biden acknowledged that the problem is energy-based, but the government does not seem to have the tools to limit the rise in crude oil and fuels short term.
The government avoided giving any concrete definition this week on the measures to limit the increases. “I have nothing specific for you. I can only tell you what we have been doing here, which is asking OPEC to increase its offer”, said the deputy press secretary of the White House, Karine Jean-Pierre, when asked about the issue.
“We are monitoring prices and making sure we have tools that we can test and use. But right now, I have nothing new to share,” she added.
With inflation that shows no signs of abating, the government is growing more uneasy about the consequences it could have on economic growth, Bloomberg reports. Raising interest rates to signal a cooling down of the economy is an option that both the government and the Federal Reserve prefer to avoid.
"The level of inflation that we have right now is not at all consistent with price stability," Federal Reserve Chairman Jerome Powell said last week. “We will use our tools as appropriate to control inflation. However, we do not think it is a good time to increase interest rates because we want the labor market to recover even more,” he explained.