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The Labor Department is releasing the latest inflation data


Inflation set another record for this century. Consumer prices in October were up 6.2% from a year ago. That is the biggest increase in more than 30 years. NPR's chief economics correspondent Scott Horsley - big guy with a big beat for big news. Hey there, Scott. Good morning.

SCOTT HORSLEY, BYLINE: (Laughter) Big number. Good morning.

INSKEEP: And I don't mean to joke because this is painful for people, but, you know, you've got to get through it somehow. How serious is this?

HORSLEY: Well, you have to go back to the first Bush administration all the way back to 1990 to see inflation figures as high as this. 6.2% over the last year is an even bigger jump in prices than forecasters had anticipated. And over at the White House, they know that higher prices don't just chip away at American's buying power. They can also chip away at the president's approval rating. Right now, less than 4 in 10 Americans approve of the way that President Biden has been managing the economy. And both Biden and the inflation watchdogs at the Federal Reserve want to make it clear they are paying attention to these numbers. Mary Daly runs the Federal Reserve Bank in San Francisco. She also sits on the central bank's policy setting committee. And Daly told me she and her colleagues understand how much of a toll these rising prices are taking on American families.

MARY DALY: If you go to a grocery store, you buy food that you usually buy. You then fill your gas tank on the way home so you can go to work or take your kids to school, you're feeling this. And when you then look at the winter coming and you realize your fuel bill for heating your home is going to rise as the winter comes, you're nervous.

HORSLEY: Winter is coming, and the Energy Department predicts home heating bills could jump as much as 54% this year compared to a year ago. That's a combination of higher fuel cost and also somewhat colder temperatures.

INSKEEP: Wow. And that is not the only higher price that people are facing.

HORSLEY: No. Energy is the big driver in today's numbers. Gasoline prices were up almost 50% from a year ago. Natural gas for furnaces and water heater's up 28%. But the Labor Department, which compiles this price index, says prices are on the rise across the economy. Used cars are getting more expensive again after getting a little break in the two previous months. We're seeing significantly higher prices for groceries. And even if you take out the volatile food and energy prices, so-called core inflation was 4.6% last month. That's more than double the Federal Reserve's long-term target. What's more, the monthly price increase between September and October was larger than the three previous months, which suggests that inflation may be accelerating.

INSKEEP: I think it's a natural question for people, Scott. The Federal Reserve's primary weapon against inflation is interest rates. Why are they not moving to raise interest rates?

HORSLEY: Well, a couple of reasons. First, the Fed thinks a lot of these price hikes are tied to pandemic-related supply disruptions, which should work themselves out on their own over time. They also think raising interest rates won't fix those supply shocks. You know, higher interest rates won't produce anymore computer chips that carmakers need to keep a lid on auto prices. Raising interest rates wouldn't persuade the OPEC cartel to pump more oil and drive down the cost of gasoline. But the other factor the Fed is considering here and another reason it's reluctant to raise rates right away is that it would likely put the brakes on job growth. And Daly says that'd be premature when we've still got millions of people who are out of work.

DALY: If we react to something that's related to a factor we hope will go away, we hope the virus gets behind us, then we've overreacted. And that's not free.

HORSLEY: That said, the Fed says it's keeping a close eye on inflation and will raise rates if it starts to look like prices are spiraling out of control.

INSKEEP: Scott, thanks so much.

HORSLEY: You're welcome.

INSKEEP: NPR's Scott Horsley. Transcript provided by NPR, Copyright NPR.

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