Supply bottlenecks and the sharp rise in energy prices are driving US inflation to its highest level in more than three decades. Goods and services cost 6.2 percent more in October than in the same month last year, as the Department of Labor announced in Washington on Wednesday. The USA has not experienced such a sharp rise in prices since November 1990. Experts interviewed by Reuters were also caught on the wrong foot. They had only expected a value of 5.8 percent, after an already hefty price increase of 5.4 percent in September. "Inflation seems to be out of control," said economist Thomas Gitzel from VP Bank.

The US is not alone in this, as prices are practically on the rise worldwide.

The reasons are delivery bottlenecks resulting from the corona crisis and a widespread lack of materials in semiconductors, steel, wood and plastic, which is driving up prices.

In China, producer prices rose to their highest level in 26 years.

In Germany, high energy costs drove the inflation rate to a 28-year high of 4.5 percent.

Energy costs drive inflation

In the US, too, high energy costs are fueling inflation.

The fuel prices at the pumps have risen to a seven-year high.

The oil price has already increased by more than 60 percent this year.

Economist Bastian Hepperle from Bankhaus Lampe pointed out that companies would increasingly pass on increased costs to their customers. "This transfer process is affecting more and more goods, since the problems on the supply side in particular do not resolve quickly." Indeed, US producers once again raised their prices sharply in October. As in September, these rose by 8.6 percent compared to the same month last year. There has not yet been a stronger increase since these statistics began in 2010.

But statistical effects also play an important role in the rapidly rising inflation. In the course of the corona pandemic, many prices collapsed in March 2020: "The low comparative base of the previous year is still the central driver for the high inflation rates of now over six percent," explains economist Gitzel. Against the background of the rapidly rising prices, the US central bank recently initiated the abandonment of the extremely loose monetary policy: "That is a good thing, because the time for expansive monetary policy measures has expired," said the bank economist from Vaduz.

The US Federal Reserve will reduce its bond purchases from the middle of this month, so that purchases of a monthly volume of currently 120 billion dollars should be completely melted off by the middle of next year.

The end of the acquisitions is also a prerequisite for an interest rate hike.

“By the end of next year at the latest, the Fed will be forced to give up its hesitant stance and initiate a key interest rate reversal,” said economist Dirk Chlench from LBBW.

The key rate is currently still firmly cemented in the range of zero to 0.25 percent.