ECONOMIC NEWS
Desjardins, Economic Studies: 514‑281‑2336 or 1 866‑866‑7000, ext. 5552336 • desjardins.economics@desjardins.com • desjardins.com/economics
NOTE TO READERS: The letters k, M and B are used in texts and tables to refer to thousands, millions and billions respectively.
IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. The data on prices or margins are provided for information purposes and may be modified at any time, based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. The opinions and forecasts contained herein are, unless otherwise indicated, those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group. Copyright © 2021, Desjardins Group. All rights reserved.
United States: Highest Inflation in Nearly 40 Years!
By Francis Généreux, Senior Economist
HIGHLIGHTS
f The U.S. consumer price index (CPI) rose 0.8% in November, after going up 0.9% in October and 0.4% in September.
f Energy prices climbed 3.5% in November, after advancing 4.8% in October. Food prices increased 0.7% on the heels of two straight 0.9% gains.
f Excluding food and energy, the core CPI gained 0.5% in November, following increases of 0.6% in October and 0.2%
in September.
f The annual variation in the total CPI accelerated from 6.2% in October to 6.8% in November. This is the strongest inflation since June 1982. Core inflation went from 4.6% to 4.9%, its highest point since June 1991.
COMMENTS
Inflation continues to run hot in the United States. The small lull recorded in August and September gave it a chance to catch its breath before accelerating further, with price increases worthy of the 1980s.
The pressures on the November CPI are essentially the same as what we’ve seen since the spring. Energy and food are still playing a major role, as is the auto sector. Used car prices climbed 2.5% in November, while new cars and auto rental both went up 1.1%. However, sectors that had been calmer woke up in November. After declining in September and October, airfares jumped 4.7%. Clothing prices rose (+1.3%) after declining or stagnating for months. Appliances went up 2.4% after dropping 0.9% in October. This is in addition to deeper pressures, such as housing prices, in which the components associated with rent (or the owner equivalent) are now recording annual variations above 3%.
Inflation can be expected to remain high and even go up further in the coming months. The impacts of comparing with last year’s prices will help keep inflation high, particularly the core index,
ECONOMIC STUDIES | DECEMBER 10, 2021
which excludes food and energy. On the other hand, gas prices have started to moderate in the United States. There’s also room to hope that the main bottlenecks impacting the global and U.S. economies will gradually ease in 2022.
IMPLICATIONS
Inflation’s sustained rise means that Federal Reserve officials will likely announce that they will accelerate the reduction of their securities purchases at next week’s meeting. This means they will arrive at the next phase more quickly, which is the start of the key rate hike expected in the second quarter of 2022.
GRAPH
Inflation is the highest it has been in 39 years
Sources: Bureau of Labor Statistics and Desjardins, Economic Studies Annual variation in %
-4 -2 0 2 4 6 8 10 12 14 16
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Consumer price index