US price surges eased in the third quarter of the year. But they climbed to a more than 30-year high in October — showing the pandemic price hikes are clearly not behind us yet.
A deluge of economic data ahead of the Thanksgiving holiday highlights how the pandemic economy is still very much in flux.
A key measure of inflation stood at 5% over the 12-month period ended in October, the Bureau of Labor Statistics reported Wednesday. That was the highest level since November 1990.
Stripping out food and energy costs, which tend to be more volatile, prices rose 4.1% over the period, the most since January 1991.
Meanwhile, the same inflation gauge grew at annualized rate of 5.3% in the third quarter, the federal Bureau of Economic Analysis reported earlier Wednesday morning. That compares with an increase of 6.5% in the second quarter. That is good news for consumers, but even with the decrease in the personal consumption expenditure index, prices are still very high.
The same early report updated the pace of US economic growth between July and September to 2.1% on an annualized basis, slightly less than economists had predicted. An initial report last month said the economy had grown at a rate of 2% last quarter. The little bump was due to strong consumer spending in spite of the high prices.
Even so the economy grew at a much weaker pace in the third quarter than in the three months before, when the pace of growth was 6.7%. Over the summer, the growing supply chain challenges, along with worries about the rapidly spreading Delta variant of the coronavirus weighed on the recovery.
Growth may have slowed over the summer, “but there is lots to give thanks for with a growth boom expected in the final quarter of the year,” said Chris Rupkey, chief economist at FWDBONDS LLC.
Economists expect that abating Delta worries, along with a faster pace of recovery in the labor market and rising wages, will make for a strong end to the year.
Even though prices are high, Americans can afford to spend their hard earned cash. At least for now. Concerns are brewing that inflation could rise to a level that will keep people from spending, which would be bad news for the recovery.
High prices have consistently shown up in measures of consumer sentiment and are weighing on how people feel about the economy.
This is a developing story. It will be updated.
™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.