U.S. Inflation Hit a 39-Year High in November 2021
U.S. inflation reached a nearly four-decade high in November, as strong consumer demand collided with pandemic-related supply constraints.
The Labor Department said the consumer-price index—which measures what consumers pay for goods and services—rose 6.8% in November from the same month a year ago. That was the fastest pace since 1982 and the sixth straight month in which inflation topped 5%.
The so-called core price index, which excludes the often-volatile categories of food and energy, climbed 4.9% in November from a year earlier. That was a sharper increase than October’s 4.6% rise, and the highest rate since 1991.
The increase in prices for new vehicles, which came in at 11.1% in November, was the largest on record, as were those for men’s apparel and living room, kitchen and dining room furniture. A 7.9% surge in fast-food restaurant prices last month marked the sharpest on record too.
The steady rise in restaurant prices during the past few months is a sign of pass-through from wages into higher prices, economists say. That dynamic is increasingly showing up in other industries. Wages tracked by the Atlanta Fed climbed 4.3% in November, up from 4.1% in October and the highest since 2007.
The November prices trend came before the emergence of the Omicron variant, which poses a new threat from a pandemic that is well into its second year. But the sharp price increases are the result of a booming economy that has developed imbalances in supply and demand as the U.S. continues to recover from the pandemic.
Tip Hongchindaget said that while demand at her Charlotte, N.C., restaurant is booming, higher costs and scarce labor are squeezing her business. A surge in chicken prices has wiped out what used to be a reliable source of profit for her restaurant, Rice & Spice Thai Street Food. And though sales are strong, the dearth of workers has prompted her to start closing for Sunday lunch.
“It has happened like a storm, and it just keeps coming,” she said. “I don’t think we can keep giving more people higher wages.”
Ms. Tip said she is now researching technological upgrades that might require less labor. She is reluctant to increase prices after having done so earlier this year, especially since the area’s other Asian restaurants haven’t raised prices much. “If we raise the price again this time, I’m pretty sure it’s going to impact” sales, she said.