Inflationary tensions heighten as US sees fastest rise in consumer prices since 1990 

October price surge revealed in the the US consumer index has exceeded analysts' expectations

Global inflationary tensions have heightened on the back of the US reporting its fastest surge in consumer prices since 1990.

The latest American consumer price index — for October — showed inflation rising by 0.9% on September levels. On a year-on-year level, US consumer prices increased by 6.2% in October. Both gains exceeded analyst expectations.

The rising cost of energy, food and cars fuelled the growth and indicated inflation is broadening beyond categories associated with reopening from Covid restrictions.

Temporary trend

Central banks the world over have consistently said they see the latest inflation trend as being temporary, but the latest US rise suggests higher inflation will be longer-lasting than previously thought, putting pressure on the Federal Reserve to end near-zero interest rates sooner than expected.

The CSO publishes its latest Irish consumer price index tomorrow. Prices have been steadily rising here, too, with year-on-year increases going from 2.3% in August to 3.7% in September.

London-based economic research consultancy Capital Economics has forecast UK inflation will show a 4% reading in October, from 3.1% in September, and consumer prices will rise by as much as 5% by next April.

“We’ve been warning for a while that CPI inflation would rise further than most people expect," said its chief UK economist Paul Dales.

• Additional reporting Bloomberg