The United States has released the highest reading of inflation, as measured by the Consumer Price Index, for 40 years.
On Friday, the CPI reading for November was reported as 6.8% and 4.9% excluding food and energy.
Higher food and fuel prices were the main driver behind the jump in inflation.
“US inflation came in at 6.8%, up from 6.2% in October and in line with forecasts. The reading which is the highest level in nearly 40 years comes as little surprise to the market due to the ongoing supply chain issues, robust consumer demand and base effects from last year kicking in,” said Dan Boardman-Weston, CIO at BRI Wealth Management.
“This is likely to add further pressure to the Fed to quicken the withdrawal of quantitative easing and raise interest rates sooner than expected.”
With inflation now at higher multi-year highs, all eyes will be on the Federal Reserve and their December meeting and expectations of a faster pace of tapering will be high.
The Federal Reserve, like all central banks around the world, have been scrutinised for their approach to monetary policy, given the strong recovery from the pandemic. Today’s reading will leave the Fed with little option but to tighten policy in an effort to bring soaring prices under control.
Stock markets were little changed on the news with the FTSE 100 spiking higher 20 points on the news before falling back to trade slightly higher at 7,325 at the time of writing.