On Wednesday morning local time, the US Department of Labor Statistics released the October CPI data. Further upward data is also challenging the market's confidence in the Federal Reserve's “temporary inflation theory.”
According to official disclosure, the US CPI for October rose 0.9% month-on-month (expected 0.6%), and the previous value rose 0.4%; the year-on-year increase was 6.2%, exceeding expectations of 5.8%, setting a new high since 1990, and also breaking “6” for the first time in nearly 30 years.
It is worth mentioning that the US Department of Labor also revealed on Wednesday that US hourly wages rose 0.4% month-on-month in October, but after deducting inflation, actual remuneration fell 0.5% month-on-month.
What worries the market even more is that unlike the previous few months, October inflation reflected an overall rise in prices. Energy, housing, food, new cars, and used cars were all major contributors to this month's inflation. The energy index, which includes the price of electricity, fuel, and natural gas, rose 4.8% month-on-month. Furthermore, as a major item that accounts for one-third of the CPI basket, housing (rent, housing prices) prices rose 0.5% month-on-month, causing the annualized increase of 3.5% to return to the high level after September 2019.
Even excluding food and energy with sharp price fluctuations, core CPI increased 0.6% month-on-month and 4.2% annualized, which also hit a new high since 1991.
MacroPolicy Perspectives economist Laura Rosner-Warburton explained that now the US economy is entering a new stage,...