A key inflation measure in the US soared to a 40-year high in September, a sharp rise that piles additional political pressure on the Democrats and will all but ensure the Federal Reserve continues its aggressive rate increases.
The core consumer price index, which excludes food and energy, increased by 6.6 per cent from a year ago, the highest level since 1982, Labour Department data showed on Thursday. From a month earlier, the core CPI climbed 0.6 per cent for a second month.
Stock were sharply lower at the opening bell, with the technology-heavy Nasdaq slumping more than 3 per cent.
The overall CPI increased 0.4 per cent last month, and was up 8.2 per cent from a year earlier. The median forecasts in a Bloomberg survey of economists had called for a 0.4 per cent monthly rise in the core and a 0.2 per cent gain in the overall measure.
Thursday's report is a blow for President Joe Biden, whose handling of the economy is viewed unfavourably by many US voters.
A poll conducted for CNN by SRSS showed found less than a third of Americans approve of how the president is handling inflation, piling pressure on his Democratic Party less than a month before they are expected to lose control of the House of Representatives in midterm elections.
“Americans are squeezed by the cost of living: that’s been true for years, and they didn’t need today’s report to tell them that. It’s a key reason I ran for president,” Mr Biden said.
“Working to give middle class families some breathing room in dealing with their costs is critical.”
Srijan Katyal, the global head of strategy and trading services at the international broker ADSS, said the latest CPI figures show inflation is still on the rise, picking up pace over previous months.
“Crucially, the annual rate of core inflation of 6.6 per cent, which represents a 40-year high and stands nearly double the long-term average of 3.65 per cent, might suggest that Fed’s fight against inflation has a long way ahead,” he said.
The increase in prices was broad based. Shelter, food and medical care indexes were the largest of “many contributors”, the report said. Prices for petrol and used cars, however, declined.
The report stresses how high inflation has broadened across the economy, eroding Americans’ incomes and forcing many to dip into their savings and rely on credit cards to keep up.
Even with the minor dip inflation took versus last month, “prices are still too high”, Mr Biden said.
While consumer price growth is expected to moderate in the coming months, it will be a slow trek down to the Fed’s goal.
The Fed raised its short-term interest rate in September to the range of 3 per cent to 3.25 per cent, and signalled it could increase to 4.25 to 4.5 per cent by the end of the year. The Federal Open Market Committee “expected inflation pressures to persist in the near-term”, minutes released from the two-day meeting showed.
It has been the Fed's most aggressive tightening campaign since the 1980s, but the labour market and consumer demand have remained resilient.
The unemployment rate returned to a five-decade low in September and businesses continue to raise pay to attract and retain the employees needed to meet household demand.
The committee next meets next month, where it is expected to raise its short-term rate by three-quarters of a point for a fourth consecutive time.
Bloomberg contributed to this report.
Scoreline
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Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.
Number of employees: Over 50
Financing stage: Series B currently being finalised
