US CPI inflation rose 0.9%, higher than expectations of 0.6% and previously at 0.4% on a monthly basis. The US dollar strengthened on the Fed Rate Hike speculation.
The US Department of Labor reported that US CPI inflation rose 6.2% in October on an annualized basis (annual US inflation rate) from 5.4% previously.
Meanwhile, on a monthly basis, inflation spiked to 0.9%, higher than expectations of 0.6% and 0.4% previously.
On the other hand, the US Core CPI, which excludes prices for volatile goods such as food and energy, also rose from 0.2% to 0.6% in October.
Worsening supply-demand mismatches, ie bottlenecks in the supply chain, coupled with rising energy and fuel prices, are the main reasons for the current soaring price of goods in the US.
The data reinforces the view that the impetus for rising inflation has proven to be stronger and more sustainable; contrary to the Fed's statement last week, which stated that the increase in inflation was still temporary.
The Fed is tapering bonds, but is still reluctant to raise interest rates anytime soon.
Senior Fed officials – including chairman Jerome Powell and his deputy Richard Clarida – are still of the opinion that the current imbalance will eventually recede.
Precisely, when global supply chains and labor markets are gradually recovering. If so, then the rise in inflation will eventually prove to be "temporary" and fade over time.
Powell and Clarida continue to indicate that the Fed will monitor the situation closely and are ready to use the central bank's tools and policies if necessary.
"What do the (US CPI) numbers say? It's simple, that (high) inflation will last a long time and structural inflation has picked up speed," Spartan Capital Securities economist Peter Cardillo was quoted by Reuters as saying. "The bottom line is that this is going to be a real challenge for the Fed in the next few months, while also showing that inflation has not yet peaked."
US Dollar Rises on Speculation of Fed Rate Acceleration Hike
The US dollar strengthened against other major currencies, after the US Consumer Inflation (CPI) was reported higher than expected.
This immediately sparked speculation that the Fed will soon raise interest rates (Rate Hike) sooner than expected.
The US Dollar Index rose to 5.94, its highest since September 25, 2020.
Post a Comment for "US Inflation Hits 31-Year High, Dollar Jumps"