Higher gas prices sent U.S. consumer inflation in November to its biggest jump since September 2005, the U.S. Labour Department said Friday.
Price increases were greater than expected last month, rising by 0.8 per cent month over month in November and by 4.3 per cent year over year.
Energy prices gained 5.7 per cent last month, pushed higher by a rise of more than nine per cent in gasoline costs. Food costs shot up by 0.3 per cent in November, leading to a year-over-year increase of 4.8 per cent, the highest since December 1990.
Clothing also cost consumers more, as prices rose by 0.8 per cent in the month. That was the biggest price hike since April 1999.
The core consumer price index, which strips out volatile factors such as food and energy, was up by 0.3 per cent.
"The upside surprise in the November inflation numbers certainly raise concern about the clear inflation pressures that continue to percolate in the U.S.," said Charmaine Buskas, senior economics strategist at TD Securities.
Earlier this week, the Federal Reserve cut interest rates in a bid to keep the U.S. economy on a solid footing while the housing market continues to stumble.
However, economists see the Fed in a difficult position if inflation pressures persist.
"This week’s reports of very strong retail sales alongside record-high import price inflation, 27-year high producer price inflation and an accelerating core CPI will add to the Fed’s angst about further rate cuts," said BMO Capital Markets economist Michael Gregory.
"With lingering price pressures and [gross domestic product] expected to slow substantially heading into 2008, the Fed will be caught in a difficult corner," said Buskas. "This suggests that any expectations that the market may have for a protracted rate cut cycle may not come to fruition."
With files from Associated PressMore Money Headlines »
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