finance news

US inflation surges to its highest level since 1990 at 6.2%

US inflation surges to its highest level since 1990 at 6.2%

The annual Inflation rate in the United States has reportedly reached its highest point in more than 30 years, fueled by quicker-than-expected rises in the prices of food and fuel.

According to reports, after a 0.9% increase the previous month, the overall consumer price index increased to 6.2% in October, which is recorded as the highest level since 1990.

It reflected a dramatic increase in the cost of living that is already being felt around the world, including in the United Kingdom, as markets reopen following the COVID-19 setback, while being hampered by the supplies struggling to keep up with the growing demands.

Meanwhile, ongoing worker shortages have further compounded the bottlenecks, causing production and delivery delays.

The price increase is alarming because it effectively risks causing harm to spending power in the process of recovering from the pandemic-fueled economic disruption. But, central banks can only go so far as to slow down the pace since factors such as energy costs are beyond their control.

Both the Bank of England and the US Federal Reserve reiterated last week that many of the determinants driving inflationary pressure are ‘transitory’; meaning they are just temporary, and that the inflation would fall back down in the foreseeable future.

However, while the Fed took steps to cool the economy and prices, its equivalent in London stopped short of policy response through a rise in interest rate, something the financial markets had anticipated.

U.S. President Joe Biden, who responded to the data by stating they were a ‘top priority’, is now under pressure to bring down fuel prices by loosening restrictions on the nation’s domestic oil producers when prominent oil nations ignored his plea for increased supply last week.

Pump prices in the United States are reaching seven-year highs ahead of the Thanksgiving and Christmas holidays, thanks to a 60% increase in wholesale costs in year-to-date.

On increased interest rate speculation, the dollar rose more than a cent over sterling to $1.34, while Bitcoin, which is widely considered as a potential risk-off asset class, soared to unparallel heights of over $69,000.

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