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In the News

US Economy - Inflation jumps to highest level in thirty years

Geoff Riley

11th November 2021

The annual rate of consumer price inflation in the USA has jumped to 6.1% - the highest for over thirty years.

The spike in living costs raises important economic and political questions not least whether the US Federal Reserve - the nation's central bank - will raise monetary policy interest rates in response in a bid to curb inflationary pressures.

The Fed believes that the jump in the cost of living is transitory drive mainly by the impact of rising demand ad domestic and global supply shortages.

But when actual inflation rises, there is nearly always an increase in inflation expectations that can feed into a wage-price spiral.

Bond interest rates are climbing - a sure sign that the markets expect official monetary policy interest rates to rise in the near future.

This BBC news article introduces me to a handy new concept - "shelter prices". Shelter refers to the cost of maintaining a home, including mortgage, rent and utilities costs.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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