HOUSTON (KIAH) – A worsening surge of inflation for such bedrock necessities as food, rent, autos and heating oil is setting Americans up for a financially difficult Thanksgiving and holiday shopping season.
Prices for U.S. consumers jumped 6.2% in October compared with a year earlier, leaving families facing their highest inflation rate since 1990, the Labor Department said Wednesday. From September to October, prices jumped 0.9%.
Inflation is eroding the strong gains in wages and salaries that have flowed to America’s workers in recent months, creating a political threat to the Biden administration and congressional Democrats and intensifying pressure on the Federal Reserve as it considers how fast to withdraw its efforts to boost the economy.
Fueling the spike in prices has been robust consumer demand, which has run into persistent supply shortages from COVID-related factory shutdowns in China, Vietnam and other overseas manufacturers. America’s employers, facing worker shortages, have also been handing out sizable pay raises, and many of them have raised prices to offset those higher labor costs.
The accelerating price increases have fallen disproportionately on lower-earning households, which spend a significant portion of their incomes on food, rent, and gas. Food banks are struggling to assist the needy, with beef, egg and peanut butter prices jumping. Millions of households that are planning year-end travel, Thanksgiving dinners and holiday gift-giving will be forced to pay much more this year.
AP writers Josh Boak in Baltimore, Dee-Ann Durbin in Detroit, David McHugh in Frankfurt, Germany, and Diane Jeantet in Rio de Janeiro, Brazil, contributed to this report.