WASHINGTON (AP) — Prices for U.S. consumers jumped 6.2% in October compared with a year earlier as surging costs for food, gas and housing left Americans grappling with the highest inflation rate since 1990.

Labor Department Wednesday reported that the annual increase in the consumer price index was higher than the 5.4% in September. The price of consumer goods increased 0.9% between September and October. It was the highest monthly increase in prices since June.

The inflation is decreasing strong gains in wages and salaries that have flowed to America’s workers in recent months, creating political headaches for the Biden administration and congressional DemocratsIncreasing pressure on Federal Reserve to act quickly to reduce its economic efforts.

After the Great Recession, about a decade ago, job growth and salary increases have been more robust during this pandemic recovery. Inflation is declining and accelerating, in contrast with the downturn that occurred over many years. Americans’ confidence in the economy, surveys have found

The core price index, which excludes volatile foods and energy items, rose 0.6% from September to October. The core prices have risen 4.6% in the past year.

Energy costs soared 4.8% just from September to October, with gasoline, natural gas and heating oil surging for the same reason that many other commodities have grown more expensive: Demand has risen sharply as Americans are driving and flying more, but supplies haven’t kept up.

Still, economists expect that inflation will slow down once supply issues are resolved and Americans return to pre-pandemic levels. COVID-19 is fading. Consumers should be spending more money on travel, entertainment, and other services, while less on goods like cars, furniture and appliances. This will reduce supply chain pressure.

No one is sure how long this might last. Inflation has been higher than economists expected. The pandemic is affecting more than just the items and vehicles directly affected, as inflation continues to spread.

“The inflation overshoot will likely get worse before it gets better,” said Goldman Sachs economists in a research note Sunday.

For months, Federal Reserve Chair Jerome Powell had described inflation as “transitory,” a short-term phenomenon linked to labor and supply shortages resulting from the speed with which the economy rebounded from the pandemic recession. Last week however, Powell acknowledgedIt is possible that prices will remain higher well into next season.

Fed chair said that central bank would reduce monthly bond purchases as an emergency measure in order to stimulate the economy. Investors now expect the Fed to raise its benchmark interest rate twice next year from its record-low level near zero — much earlier than they had predicted a few months ago.

Large companies often pass on higher wages to customers. In some instances, this means that consumers may be paying more than they are cutting back.

To attract workers, for example, McDonald’s boosted hourly pay 10% to 15% over the past year. Last month, McDonald’s announced that its prices had increased by 6% from the previous year to help offset higher labor costs. However, the company’s sales jumped 14% after virus restrictions lifted.

Others have taken a more prudent approach. Wayfair, an internet furniture retailer, stated last week that their costs were rising due to COVID epidemics in Asia and congestion at ports. Labor costs have risen as well. But the company isn’t necessarily passing along all those higher costs.

“We are in a mass-oriented business where the average customer does not have an unlimited discretionary budget,” said Michael Fleisher, Wayfair’s chief financial officer. “Inflation is rampant across the economy, and there are competing demands for their time and wallet share.”

Source: HuffPost.com.

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