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US CPI inflation reaches 6.8% year-on-year

Upward pressures on prices due to supply issues and new Covid-19 variants weigh on investors’ minds

10 December 2021

US CPI inflation was bang in line with estimates of a 6.8% year-on-year increase – the fastest pace since 1982. This won’t change the general view in markets of almost three hikes by the Federal Reserve priced in over the course of 2022. A faster than forecast inflation rate may have heaped pressure on the Fed to further quicken the pace of tapering to their bond purchases but this print probably doesn’t add much more to that argument. Energy costs were up 3.5% over the month, contributing to a sticky inflation figure but this is not likely to persist in December during which prices have come back somewhat. Could we be close to peaking out on this persistently high inflation? It is possible, but again the argument of continual supply issues maintaining upward pressure on prices as the new Covid variant spreads worldwide will be at the forefront of investors’ minds.

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Charles Hepworth

Investment Director
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