US inflation reached its highest year-on-year level since October 1990, mainly driven by higher energy prices. The official consumer price figures also exceeded expectations and put the government in an awkward position.

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US inflation

President Joe Biden acknowledged that energy prices drive inflation and that its reversal is “a priority”. The government is analyzing measures to limit the rise in oil and fuel prices, but has not yet confirmed any.

The Department of Labor released inflation data for October, with the consumer price index rising 0.9% monthly, beating market expectations and surpassing 0.4% in September. With this increase, inflation climbed to 6.2% in the last twelve months – the strongest year-on-year price increase since December 1990.

In a statement released Wednesday, Biden said inflation “is hurting the pockets of Americans, and reversing that trend is my priority”. The president added that “most of the price hike in this report is due to rising energy costs.”

October inflation data has left the government in an uncomfortable position. Biden admitted the problem is energy-based, but the government does not appear to have the tools to limit the rise in crude oil and fuels in the short term.

Inflation concerns

This week the government avoided defining the measures to limit the increases in concrete terms. “I have nothing in particular for you. I can only tell you what we have done here and ask OPEC to increase its offer, ”said White House Deputy Press Secretary Karine Jean-Pierre when asked.

“We monitor prices and make sure we have tools that we can test and use. But at the moment I have nothing new to share, ”she added.

With inflation showing no sign of subsiding, the government is becoming increasingly worried about the impact it could have on economic growth, reports Bloomberg. Hikes in interest rates to signal an economic slowdown is an option that both the government and the Federal Reserve prefer to avoid.

“The level of inflation we have now is not at all in line with price stability,” Federal Reserve Chairman Jerome Powell said last week. “We will use our instruments accordingly to control inflation. However, we don’t think this is a good time to hike rates because we want the labor market to recover even more, ”he said.

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