U.S. inflation accelerated in September, as pandemic labor and material shortages continued to push up prices.
The Labor Department said the consumer-price index rose .4 percent in September.
As reported by the Wall Street Journal, on an annual basis, inflation picked up with a consumer-price index increase of 5.4 percent, the highest since 2008.
The increased inflation will result in a 5.9 percent increase for Social Security benefits, the largest increase in nearly 40 years. Indeed, the Social Security Administration will release its annual cost-of-living adjustment on Wednesday.
High demand is a factor driving high inflation. Spending jumped at 11.9 percent in the second quarter, as vaccination rates increased and businesses reopened.
Worker shortages are also driving up wages, pressuring companies to raise prices. Companies are also struggling with material shortages, caused by a combination of interrupted production and supply chain issues.
Per the Wall Street Journal:
Fed Vice Chairman Richard Clarida said Tuesday that the underlying rate of inflation in the U.S. economy is near the Fed’s 2% longer-run objective and, thus, that the recent surge will prove “largely transitory” once the supply bottlenecks clear. However, he said the Fed would raise rates if it saw evidence that households and businesses were beginning to expect higher inflation.
“Monetary policy would react to that,” Mr. Clarida said. “But that is not the case at present.”