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US inflation jumps 6.8% in November — fastest rate in 39 years

U.S. consumer prices rose at the fastest clip in nearly four decades last month, underscoring the persistently elevated inflationary pressures in the recovering economy.

The Labor Department's Consumer Price Index (CPI) climbed by 6.8% in November compared to last year, marking the fastest annual increase since June 1982. This rate matched consensus economists' estimates, according to Bloomberg data, but accelerated compared to the 6.2% year-over-year rate from the prior month.

Even excluding more volatile food and energy prices, the so-called core CPI rose by 4.9% over last year for the fastest increase in about three decades.

On a month-over-month basis, the CPI rose 0.8% in November, coming in ahead of the 0.7% rise anticipated. This also marked an eighteenth straight month of advances in the index. And excluding food and energy prices, the month-over-month CPI rose 0.5%, matching estimates and coming down by just a tick compared to October’s 0.6% increase.

“Inflation is outpacing increases in household income and weighing heavily on consumer confidence, which is at a decade low," Greg McBride, chief financial analyst at Bankrate, wrote in an email on Friday. "It is only a matter of time before it impacts consumer spending in a material way.”

Contributions to the CPI last month were broad-based, though price increases in gasoline, shelter, food and both new and used vehicles were some of the largest contributors.

Energy prices overall were up 3.5% in November over October for sixth consecutive monthly gain, as increasing consumer mobility during the reopening pushed up both demand and prices for fuel and other energy products. Gas prices alone were up 6.1% to match October’s increase, and the gasoline price index was up about 58% over last year for its largest 12-month increase since 1980.

Meanwhile, used car and truck prices rose at a 2.5% clip to mark a back-to-back monthly advance, and new vehicle prices gained 1.1% to build on October’s 1.4%. rise.

Grocery stores prices also increased further during the month, with an index tracking food at home gaining 0.8% in November over October. Over the past 12 months, this index gained 6.4%, marking the fastest increase since Dec. 2008.

For investors, the marked jumps in prices suggest the Federal Reserve may need to step in more swiftly and forcefully than previously anticipated to rein in inflation. In the past few weeks, rhetoric from key monetary policymakers has already turned more hawkish, with Fed Chair Jerome Powell saying it may be appropriate to speed up the central bank's asset-purchase tapering program in the face of rising price pressures and firming economic conditions. This program, which began at the height of the pandemic last year and only just began to be tapered last month, had served as one tool providing support to the virus-stricken U.S. economy.

"Inflationary pressures are building in the economy and that is going to force the Fed’s hand," Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote in an email on Friday. "Specifically, the Fed is going to have to increase the pace of their tapering plans – potentially reducing their buying twice as quickly, down by $30 billion/month instead of $15 billion/month – and then look to either balance sheet reduction (i.e., outright selling of bonds that they’ve already purchased) or interest rate hikes, in order to combat inflation."

"The economy continues to grow at an above average pace, but inflation is also increasing much more quickly than we have experienced in decades, so we are at an inflection point," he added.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter