- The Consumer Price Index soared 6.8% year-over-year in November, exceeding the 6.7% forecast.
- The reading shows the fastest pace of price growth since 1982, when Ronald Reagan was president.
- Inflation has accelerated through the fall as the supply crisis and strong spending fueled price hikes.
Build Back Better just got a body blow. Joe Biden is facing the highest inflation since Ronald Reagan was president.
The Consumer Price Index — a commonly used measure of US inflation — rose 6.8% year-over-year in November, the Bureau of Labor Statistics said Friday. Economists surveyed by Bloomberg forecasted a one-year gain of 6.7%. The print shows inflation accelerating again from the October pace of 6.2% and reaching its highest level since 1982, when Reagan was in the middle of his first term as president.
On a month-over-month basis, the index climbed 0.8%. That exceeded the median forecast for a 0.7% jump and showed inflation cooling from the 0.9% surge seen in October. Though the year-over-year measure signals worryingly high inflation, the slowing pace suggests inflation might have peaked this fall.
Core CPI, which strips out volatile food and energy prices, ticked 0.5% higher through the month, matching the average forecast. Core measures are usually regarded as more telling of broad inflation trends, as they aren't influenced by sudden moves in gasoline or grocery prices.
The Friday release shows just how hard the supply-chain crisis hammered businesses and shoppers across the US. Port bottlenecks and goods shortages eased somewhat in November but remained a major strain on the recovery. The start of holiday-season spending and Black Friday sales led to strong demand crashing up against limited supply.
November also saw US gas prices peak before tapering off into December. The nationwide average reached $3.43 per gallon earlier in the month but has since crept slightly down to $3.35. A prolonged downtrend could pull broad inflation to lower levels, though it's unclear whether the Omicron variant will curb travel demand.
The print also ramps up pressure on Democrats as they push for another massive spending package. The party aims to pass the Build Back Better plan by Christmas, but red-hot inflation has led Republicans to link new spending to soaring prices.
Elevated inflation has also led Sen. Joe Manchin of West Virginia to express some trepidation toward passing the measure in 2021. The centrist Democrat said Tuesday that inflation is "not transitory" and the Senate should focus more on inflation risk than jamming through more spending.
"The unknown we're facing today is much greater than the need that people believe in this aspirational bill that we're looking at. And we've got to make sure we get this right," Manchin said during The Wall Street Journal's CEO Council Summit. "We just can't continue to flood the market as we've done."
With inflation endangering Biden's spending agenda and hurting Democrats' 2022 election hopes, the Friday data suggests the party has a tougher road ahead before price growth slows.
Where inflation heated up in November
The CPI report offers economists the first look at where prices soared the most last month. Energy costs fueled the bulk of the month's inflation, with the category seeing prices climb 3.5% in November. Gasoline prices saw the biggest jump of 6.1%, matching the pace seen in October. Fuel oil inflation slowed to 3.5% from 12.3%, according to the report.
Food prices rose 0.7% month-over-month, decelerating from October's pace of 0.9%.
Used car prices jumped 2.5% through November, matching the pace seen the month prior. The category fueled one-third of higher inflation in the spring before cooling off through the summer. The category is still up 31.4% year-over-year, more than nearly any other product.
Shelter inflation held at 0.5% month-over-month. The category has been closely watched in recent months. Such inflation tends to be stickier than other kinds, meaning it's less likely to reverse course if it speeds up. Though the US housing market has been white-hot throughout 2021, soaring home values have done little to drive shelter inflation higher.