Inflation rises to 6.8% in November, the biggest jump in 39 years

Prices rose at the fastest pace in nearly 40 years last month, increasing 6.8 percent over the same period a year ago, as inflation continues to squeeze households and businesses nationwide and complicates the political environment for Congress and the White House.

Consumer price index 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 as affected by the coronavirus pandemic.

The November data marked the largest 12-month increase since June 1982, during a period when inflation was more of a scourge on daily life than most millennials have ever known. Current inflation dynamics have been spurred by a devastating pandemic that roiled the global economy, upsetting the workforce and supply chains, while stimulus measures helped unleash high demand for goods.

The broad-based increases span just about every sector, from pork, poultry and produce to housing and sporting goods. Companies large and small are raising prices or making tough decisions to make up for the rising costs of hiring, transportation and basic goods. Even Dollar Tree, which has long sold items for $1, is hiking prices to $1.25.

In time, it is possible that lower gas and energy prices or unclogged supply chains will help steer prices back down to more-sustainable levels. But it is unclear when that will happen, and in the meantime, businesses and consumers could start to change their expectations of what is still to come. Plus, the more persistent and embedded high prices become, the harder it will be for policymakers to rein them in.

“Yes, inflation can abate, but what [policymakers] care about is: Is it significant or insignificant to peoples’ lives and decision-making?” said Diane Swonk, chief economist at Grant Thornton. “This is inflation that’s not likely to be insignificant anytime soon, and that’s a problem.”

Inflation has emerged as a top political concern ahead of the 2022 midterms, with the cost of food or gas often a test for how people perceive the economy.

Republicans criticized the high inflation numbers, blaming Democrats’ stimulus as the culprit and warning against future legislative packages.

“Today’s jaw-dropping inflation report should alarm every single American, but especially policymakers,” Sen. Patrick J. Toomey (R-Pa.) said in a statement Friday morning. “Hard-working American families are suffering as a direct result of the Biden administration’s reckless borrowing and spending and anti-energy policies.”

Democrats rallied behind a different message, saying their Build Back Better spending proposals are key to lowering costs, including for child care and health care.

“We’ve never had this kind of growth in 60 years, but inflation is affecting people’s lives,” President Biden said Friday at his Summit for Democracy. “The reason why … economists think [Build Back Better] is going to, in fact, diminish the impact on inflation is because it’s reducing costs for ordinary people,” Biden added.

The November increases were driven by broad-based price hikes in most of the categories tracked, similar to October inflation. Indexes for gasoline, shelter, food, used cars and trucks and new vehicles were among the larger contributors. Airline fares also increased in November, rising 4.7 percent from October after declining over the previous few months as people geared up for holiday travel.

Roughly half of the month-over-month increase in the consumer price index was due to price increases in cars and energy. The energy index was up 3.5 percent in November, and measures of gasoline were up 6.1 percent. Recent moves by the Biden administration intended to bring prices down at the pump are not reflected in Friday’s data.

The cost of medical care has risen in four of the past five months, although it grew at a slower pace in November than in October. Swonk noted that coronavirus cases and the recent delta-variant wave have filled hospitals to capacity in many parts of the country, which can prompt hospitals to pause elective surgeries.