The U.S. inflation rate accelerated to a startling 6.2% in October, a key gauge of consumer prices showed, far exceeding economists’ estimates and marking the first time since 1990 it’s been this high.
- Prices in October were 6.2% higher than a year earlier, marking the highest inflation rate since 1990.
- Even with inflation rates soaring this year, economists hadn’t expected it to get this bad.
- Prices rose across a broad range of categories, including groceries, restaurant tabs, gas, home heating oil, rent, and cars, both new and used.
- Economists said the trend could last longer than expected, and it might get worse before it gets better.
The Consumer Price Index (CPI), perhaps the most widely referenced measure of inflation, jumped another 0.9% between September and October and is now 6.2% higher than a year ago, the Bureau of Labor Statistics said Wednesday. Not only was the acceleration sharp—the year-over-year inflation rate rose from an already-high 5.4% in September—but price increases were widespread across most major categories of purchases. Economists had been anticipating a monthly bump of 0.6% and a 5.9% increase for the 12 months, according to ING.
Prices for everything from groceries, rent, gas, and medical care to cars, dinner out, and cigarettes climbed during the month, giving experts reason to worry that the sticker shock stemming from pandemic disruptions isn’t going away anytime soon, and may get worse before it gets better. The broad-based nature of the increases meant that even the “core” inflation rate—which excludes food and energy prices because they are prone to wild swings—shot up, accelerating from 4.0% in the year through September to 4.6% in the year through October. By that measure, it’s the highest rate since 1991.
“The onslaught of inflation continued in October,” economists at Wells Fargo Securities said in a commentary. “The breadth of price increases cannot be ignored and suggests any softening in the overall pace of inflation remains a ways off.”
Things are getting rapidly more expensive even as some indicators—economic and otherwise—suggest life is starting to return to normal after a crushing COVID-19 pandemic. Inflation is hotter not only because shortages of materials and workers are making things harder to get, but because there’s a lot of consumer demand, fueled in many cases by pandemic-era government aid that didn’t just go to people who had lost their jobs.
The last time the overall inflation rate was this high, the Soviet Union still existed, Home Alone was in theaters, and Vanilla Ice was at the top of the charts.
Energy prices had some of the biggest jumps in October. Gas prices increased 6.1% from September and almost 50% from the previous year, while fuel oils such as home heating oil rose 12.3% from September and 59.1% from a year earlier. Food prices rose 0.9% over the month and 5.3% for the year, with groceries and restaurant dining jumping about the same amount.
At the same time, prices for used cars and trucks rose 2.5% from September and 26.4% over the year, while the cost of new vehicles increased 1.4% from September and 9.8% over the year Rent prices rose 0.4% from September and 2.7% over the year.
In fact, so many items got more expensive that a breakdown of major categories showed only airfare and alcohol getting a tad cheaper compared to September. Prices for doctor’s visits, clothes, and car insurance didn’t change.
And while demand for workers has been pushing wages higher, earnings didn’t keep up with price increases in October, the BLS said in its report on “real earnings,” also released Wednesday. Hourly wages increased 0.4% in October, but because of the 0.9% increase in CPI, real earnings fell by 0.5%.
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