Report on inflation to force the Fed to move more quickly than it would like on raising rates.

ARLINGTON, Va.—Add NAFCU’s chief economist to those who expect last week’s report on inflation to force the Fed to move more quickly than it would like on raising rates.

Curt Long

The most recent numbers show inflation in the U.S. hit its highest point in more than 30 years, according to data released by the Labor Department today.

On a seasonally-adjusted basis, overall consumer prices rose 0.9% in October, with the Bureau of Labor Statistics reporting the overall consumer price index (CPI) grew 6.2% over the 12-month period.

NAFCU Chief Economist and Vice President of Research Curt Long noted that most of the inflation was largely driven by energy prices.

"After three months of more moderate price growth, the October figure matches June for the highest inflation print of the year," said Long.

Energy prices rose 4.8% during the month, following a 1.3% increase in September. From a year ago, energy prices were up 30%. Additionally, food prices climbed 0.9% in October and are up 5.3% compared to this time last year.

Fed Action

"Markets reacted to the news immediately with a bounce in short-term yields as markets anticipate Fed action in the first half of 2022,” Long added.

"The Fed will want to wait longer than that, but inflation must settle at a more comfortable level quickly,” concluded Long. “If price growth continues at its current pace, the calls for action will be too loud to ignore.”

Core prices (excluding food and energy costs) rose 0.6% compared to September. Year-over-year core CPI growth was 4.6%.