Dec 10, 2021 - Economy

America's inflation burst

Illustration of an alarm light with a dollar bill sign on the front

Illustration: Annelise Capossela/Axios

Inflation is bursting almost everywhere — a warning that rapid price spikes may stick around.

Why it matters: Until recently, high prices have been shrugged off as temporary, thanks to pandemic-era quirks (read: messed-up supply chains) that are expected to ease.

  • Data from Friday is the latest signal that price pressure has spread to parts of the economy not slammed by those quirks.
Source: U.S. Bureau of Labor Statistics; Chart: Axios Visuals
Source: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

What's new: Consumer costs rose at the fastest pace since 1982. Strip out volatile energy and food components, and it's the quickest pace since 1991.

  • "The narrative that inflation is mostly energy and goods rings hollow," says Conrad DeQuadros, an economist at Brean Capital.

Where it stands: Prices jumped across almost all categories for the second straight month, the government said.

  • The only categories where costs dropped from October: car insurance, recreation and communication.

What to watch: About half of the overall monthly jump in prices stemmed from pricier cars and energy (including gasoline) alone. But shelter costs — up 0.5%, matching the quick pace set the prior month — were the giant red flag.

  • "Once you start to see prices accelerating here, it doesn't tend to reverse quickly," says Aneta Markowska, an economist at Jefferies.

The bottom line: Mega-demand for goods from flush consumers, supply chain snafus and jumping housing costs have collided to create the most expensive economy in almost four decades.

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