UK inflation soared to its highest level in a decade in November, piling pressure on the Bank of England to raise interest rates

UK gas prices petrol station fuel
Prices at UK gas stations have surged.

  • UK inflation rose 5.1% in the year to November, the biggest jump since September 2011, official figures showed.
  • The Wednesday figures pile pressure on the Bank of England to tamp down price rises by raising interest rates.
  • The UK is one of many advanced economies grappling with strong inflation after the pandemic shock of 2020.

Consumer prices across the UK economy rose 5.1% in the year to November, according to official figures out Wednesday, which is the fastest rate of inflation in a decade.

The jump in inflation piles pressure on the Bank of England to raise interest rates to stamp down on the rapid price rises. That said, the UK central bank’s calculations have been complicated by the spread of the Omicron coronavirus variant.

November’s 5.1% figure was well above economists’ expectations of a 4.8% increase in the consumer price index, and was significantly higher than October’s 4.2% figure. It was the strongest reading since September 2011.

Price rises were broad-based, the Office for National Statistics said. Fuel was an especially big driver, with average prices at gas stations rising to levels not seen before.

Britain’s pound rose after the data was released, and was last up 0.26% to $1.327. The FTSE 100 stock index was down 0.11%.

The BoE expected inflation to come in at around 4.5% in November. It chose not to raise interest rates at its last meeting, and markets will watch for any change when it announces its latest decision Thursday.

On Tuesday, the International Monetary Fund warned the BoE was at risk of letting inflation get out of control and urged it to “withdraw the exceptional support provided during 2020.” Inflation in November was far higher than the bank’s 2% target.

Read more: Buy these 38 stocks to profit as inflation spikes to its highest level in nearly 40 years — and avoid pain from future disruptions, Jefferies says

However, the spread of the highly mutated Omicron coronavirus variant has recently caused economists to dial back their expectations that the BoE on Thursday would raise its main interest rate from its current record low of 0.1%.

The November inflation reading “gives the Bank enough ammunition to raise interest rates tomorrow, but we still think it is more likely to keep its powder dry until it knows more about the Omicron situation,” said Paul Dales, chief UK economist at the consultancy Capital Economics.

The UK is one of many advanced economies hit by sharply rising prices as consumer demand recovers from 2020’s coronavirus shock, but supply struggles to keep up.

In the US, the Federal Reserve is due to announce its latest monetary policy decision Wednesday, after inflation soared to 6.8% in November, an almost 40-year high.

The European Central Bank is set to announce its decision Thursday. Eurozone inflation hit 4.9% in November, according to an early estimate, the highest level since the single-currency bloc was founded in the late 1990s.

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Billionaire investor Bill Ackman says inflation is being underreported by the government due to soaring rent costs

FILE PHOTO: FILE PHOTO: Bill Ackman, CEO of Pershing Square Capital, speaks at the Wall Street Journal Digital Conference in Laguna Beach, California, U.S., October 17, 2017. REUTERS/Mike Blake/File Photo
Bill Ackman, CEO of Pershing Square Capital

  • Bill Ackman believes inflation is being underreported by the government due to soaring rent prices.
  • Friday’s CPI release showed a 6.8% increase in November, hitting its highest level since 1982.
  • “The inflation that households are actually experiencing is raging and well in excess of reported gov’t statistics,” Ackman tweeted.

Friday’s consumer price index release by the US Bureau of Labor Statistics showed inflation jumped 6.8% in November from a year earlier, hitting its highest level since 1982.

But billionaire investor Bill Ackman thinks those figures are understated due to soaring rent prices that aren’t reflected in the inputs that are used to calculate the CPI.

In a series of tweets on Friday, Ackman explained that the consumer price index relies on homeowner surveys to estimate inflation in housing costs. “This is an extremely imprecise metric,” the CEO of Pershing Square Capital said, adding that he instead relies on the single-family rental market for more accurate data.

“Owners’ equivalent rent in [Friday’s] reported core CPI was 3.5% year-over-year. The largest owners of nationwide single family rentals are reporting 17% year-over-year rent increases,” he said.

Recalculating the consumer price index with the different rent increase data would send November’s reading to 10.1% from 6.8%, according to Ackman. And the trend is unlikely to slowdown due to an imbalance in the housing market.

“Housing inflation is unlikely to abate based on supply and demand trends. The inflation that households are actually experiencing is raging and well in excess of reported government statistics,” Ackman said.

Soaring inflation seems to be top of mind at the Fed, which recently signaled that it may speed up the tapering of its monthly bond purchase program as the unemployment rate fell below 5%. Policymakers meet this week and will release a statement on Wednesday.

Fed Chairman Powell also testified to Congress last month that the Fed is retiring the use of the word “transitory” when describing inflation.

Apart from ending its monthly bond purchasing program, the Fed can tame inflation by raising interest rates, which many market participants will begin sometime next year. 

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Billionaire investor Ray Dalio says the US is ‘on the wrong path’ after inflation hits a 31-year high

2021 01 25T105118Z_1924936237_RC2YEL9EH2SH_RTRMADP_3_USA BIDEN DALIO.JPG
Ray Dalio founded the hedge fund Bridgewater,

  • Billionaire investor Ray Dalio has said the US is “on the wrong path” after inflation surged to a 31-year high.
  • He also warned investors that strong inflation erodes their wealth, even if their portfolios are rising.
  • Dalio said the US has to focus on raising productivity, if it wants to continue to grow and prosper.

Billionaire hedge fund manager Ray Dalio has said the US is “on the wrong path” after inflation hit a 31-year high in October.

Dalio posted a newsletter on LinkedIn warning that strong inflation is eroding people’s wealth. He said people shouldn’t be fooled into thinking they’re getting richer just because their financial portfolios are going up.

He had a stark warning for the US, saying it must focus spending on investment to boost productivity, rather than to fuel consumption.

“The United States now is spending a lot more money than it’s earning, and paying for it by printing money that is being devalued. To improve, we have to raise productivity and cooperation. Right now we are on the wrong path,” Dalio said.

The investor’s intervention came after data showed Wednesday that US consumer price index inflation shot up to 6.2% year-on-year in October, the highest level since 1990. The jump was powered by rising prices for energy, shelter, food and vehicles, with the US economy running red hot as it recovers from the coronavirus pandemic.

Read more: Goldman Sachs says these 30 stocks with optimal pricing power will benefit most as inflation hovers at 30-year highs amid a continued supply-chain crunch

Dalio founded the $150 billion hedge fund Bridgewater Associates, and is its co-chief investment officer.

He said the high level of inflation was a result of stimulus policies from the US government and Federal Reserve. “At this time 1) the government is printing a lot more money, 2) people are getting a lot more money, and 3) that is producing a lot more buying that is producing a lot more inflation,” he wrote in the newsletter.

“Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price, without seeing how their buying power is being eroded. The ones most hurt are those who have their money in cash,” he added.

Investors are normally very worried about inflation because it eats away at the value of their portfolios. For example, if an asset returns 3% in a year but inflation is 4%, the investor has lost 1% in real terms.

Yet in recent weeks the stock market has remained relatively buoyant, despite the surge in price levels. Many analysts say this is because real returns on bonds are at record lows, meaning there’s no alternative to buying stocks.

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High inflation is the bill coming due for Trump and Biden’s stimulus that kept us out of a Great Depression

trump biden
Presidents Donald Trump (L) and Joe Biden (R).

  • Inflation is the highest since 1990, but remember: That’s the price of huge stimulus and a booming recovery.
  • The $5 trillion in stimulus passed by Trump and Biden powered spending so strong that supply hasn’t caught up.
  • The economy is also much stronger than it was one year ago. Prices are higher, but Americans are doing better.

There’s one thing being largely left out of the inflation debate.

Yes, Americans are dealing with the worst inflation since 1990. But that’s the price to pay for historic stimulus and a thriving recovery, and it’s a price well worth paying.

The Consumer Price Index shot 0.9% higher in October, exceeding the 0.6% forecast and fueling the largest year-over-year jump in 31 years. It’s bad news for your wallet today, but it’s good news if you zoom out and consider what it says about the economy: Americans have more money to spend and want to spend it.

Where the cash came from is obvious, as President Donald Trump and President Joe Biden collectively passed $5 trillion in pandemic stimulus, and much of the aid arrived as direct payments and enhanced unemployment benefits. This stimulus didn’t just make Americans whole again; it fueled an unprecedented economic boom.

Consumer spending counts for about 70% of economic activity, and preserving those levels was key to bringing the US back online. Trump and Biden did better than that.

Americans saved a lot during lockdowns and mostly spent on durable goods. When they started leaving the house again in 2021, spending on goods stayed strong while spending on services soared. It means Americans are buying more stuff overall than they have in decades, but the supply chain to provide that stuff is buckling under the pressure. That’s a telltale recipe for inflation, but it’s a lot better than mediocre spending and a lingering recession.

For the first time since the 1970s, the American shopper wanted to buy stuff and was told “no,” or at least “not right now.” That pain has manifested as higher inflation, but consider the alternative.

The 2020 and 2021 economies are starkly different

More than half of the government’s $5 trillion in stimulus was approved after October 2020. That means the year-over-year inflation reading captures this massive policy support – and its effects on the recovery.

What all that money accomplished: Way more people are working now. Stimulus juiced the labor market recovery, leading firms to quickly rehire, with the economy adding nearly 6 million jobs from October 2020 to October 2021.

Year-over-year inflation continues to outpace average wage growth, but the wage comparison ignores all the jobs added over the last year. Aggregate private payrolls – which count hours worked with average earnings – have handily outpaced inflation, Bloomberg editor Joe Weisenthal highlighted in a Wednesday newsletter.

Put simply, Americans are collectively earning much more than they did one year ago. It only makes sense prices would rise faster than before.

“Inflation is definitely a reflection of our economy’s reviving,” Labor Secretary Marty Walsh told Insider on Friday. “I wish we could just flip a switch and have that, you know, automatically just level itself off … We still have work to do there.”

The virus situation itself also separates October 2021 from October 2020. Late last year, the US was just entering the worst stage of the pandemic. Case counts ripped higher into the winter, leaving Americans stuck at home and sparking an unexpected plunge in jobs. Compared to the current economy, last year’s was a ghost town.

And as for how much inflation has picked up, the economic doctrines of the 20th century state that such a huge increase of the money supply should lead to inflation even worse than Americans have seen this year, but even October’s huge jump is trailing behind the amount of cash pumped into the economy. The country’s money supply has ballooned by roughly 15% in the past year and has nearly quintupled from pre-pandemic levels.

Now what the economy really needs is for the slow healing of the supply chain to speed up a little bit. This inflationary tab is one worth paying to prevent a catastrophe.

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US stocks slide as inflation data shows prices continue to rise at the fastest rate in decades

Traders work on the floor of the New York Stock Exchange (NYSE) on November 05, 2021 in New York City.

US stocks slid Wednesday after inflation data showed that prices are rising at the fastest rate in decades.

The benchmark S&P 500 edged lower after ending an eight-day winning streak in the previous session – its longest run since 1997. The Dow Jones Industrial Average and the tech-heavy Nasdaq-100 also slipped.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Wednesday:

The Consumer Price Index – a key measure of nationwide inflation – gained 6.2% on a year-over-year basis, the fastest rate of annual inflation since 1990. It also showed price growth picking up from September’s one-year pace.

CPI rose 0.9% in October, higher than the 0.6% estimated by economists at Bloomberg. The reading marks an acceleration from the 0.4% gain seen in September and the largest one-month jump since 2008.

“While supply chain disruptions and labor shortages won’t last forever, the bigger question is to what extent these factors affect wage inflation and housing inflation, which are stickier parts of the overall inflation picture and can be slower to reverse,” Nancy Davis, founder of Quadratic Capital Management, said in a statement.

If inflation doesn’t subside, Davis, who is also portfolio manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF, said the central bank may need to taper at a quicker pace and hike interest rates. This, she said, could hurt stocks and bonds.

Still, she said that CPI is just one measure of inflation. A significant portion of its calculation is comprised of shelter, mainly rental prices in cities, which is not the most comprehensive view of inflation, she added.

Equities have been boosted by strong third-quarter earnings despite headwinds such as supply-chain constraints, persistent labor shortages, and rising inflationary pressures.

The yield on 10-year Treasury notes rose to 1.476% Wednesday compared to Tuesday’s 1.431%. Bond yields and prices move inversely.

Coinbase Global stock slipped 11% Wednesday after the largest cryptocurrency exchange in the US reported third-quarter earnings that missed Wall Street’s expectations.

In cryptocurrencies, bitcoin slipped below $67,000 after hitting new highs, while litecoin is on track for a 30% weekly gain.

Oil prices rose. West Texas Intermediate crude oil jumped 0.17% to $84.29 per barrel. Brent crude, oil’s international benchmark, climbed 0.18% to $84.93 per barrel.

Gold edged higher by as much as 1.31% to $1,853.61 per ounce.

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The highest inflation in a decade worsened in October as the supply-chain crisis showed no signs of stopping

Shopping Mall coronavirus
People wearing masks are seen in a shopping mall in San Mateo, California, the United States, May 19, 2021.

  • The Consumer Price Index gained 0.9% in October, overshooting the median estimate of 0.6%.
  • The reading also marks an acceleration from September’s price growth of 0.4%.
  • The report shows inflation rebounding as the global supply-chain crisis raged on and companies kept hiking prices.

Inflation swung higher in October, signaling the global supply-chain crisis kept prices surging at the fastest rate in decades.

The Consumer Price Index – a popular measure of countrywide inflation – gained 0.9% last month, the Bureau of Labor Statistics said Wednesday. Economists surveyed by Bloomberg expected the index to climb 0.6%. The reading marks an acceleration from the 0.4% gain seen in September and the largest one-month jump since 2008.

On a year-over-year basis, CPI rose 6.2%. That’s the fastest rate of annual inflation since 1990 and also showed price growth picking up from September’s one-year pace.

Core CPI, which excludes volatile food and energy prices, gained 0.6% in October, according to the report. That exceeded the median forecast for a 0.4% jump.

The Wednesday report shows inflation rebounding in October as the global supply tangle raged on. Shipping delays and port logjams have strangled businesses in recent months, leaving firms unable to match Americans’ strong spending. The worldwide energy crunch also lifted CPI as countries scrambled to generate ample power.

Supply-chain problems have been “larger and longer-lasting than anticipated” and kept inflation high, Fed Chair Jerome Powell said in a November 3 press conference.

As companies have continued to lift prices, other pockets of the economy are healing faster. The US added 531,000 nonfarm payrolls in October, according to data out Friday. That handily exceeded forecasts and marked a strong rebound in the labor market’s recovery after it stumbled during the Delta wave. The latest jobless-claims data hinted hiring held strong into November, and with the holiday season approaching, greater spending stands to juice the rebound even more.

Paying big for food, gas, and cars

The October price surge was mainly driven by ballooning energy prices. The segment rose 4.8% last month, beating out food and services. Fuel oil saw the largest price jump of any category with a 12.3% gain in October alone. Gasoline prices and utility gas prices rose 6.1% and 6.6%, respectively.

Prices for food rose 0.9%, matching the September rate and bringing the year-over-year jump to 5.3%. All six major grocery-food groups gained through the month, and the index for meat, poultry, and fish notched a 1.7% leap.

Used car prices rose for the first time since July. The category saw the most dramatic price gains of any group earlier in the year, with monthly increases surpassing 10% in April and June. Price growth was weaker at 2.5% in October, but suggests the rapid vehicle inflation could return.

Clothing prices saw the smallest growth throughout last month, with prices holding flat after falling 1.1% in September. Shelter, transportation, and medical care costs all saw prices rise less than 1%.

The report shows the country still struggling to handle inflation despite a broad economic recovery. The Biden administration and the Federal Reserve have both doubled-down on the view that inflation will prove transitory. Despite price growth running above prior forecasts, inflation should cool off next year, Powell said at a press conference last week.

“As the pandemic subsides, supply bottlenecks will abate. As that happens inflation will decline from elevated levels,” he said. “The timing of that is uncertain. We should see inflation moving down by the second or third quarter.”

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UK inflation unexpectedly cools in September – but analysts say it’s the ‘lull before the storm’

UK woman shopping shops red bus economy reopens London
The UK economy has been hit by supply chain disruptions and energy price rises.

  • UK inflation slowed in September largely due to a measurement quirk, the country’s stats office said.
  • Economists expect prices to jump before the year is out, as energy prices and supply problems hit the economy.
  • Markets expect the Bank of England to raise interest rates before the end of the year, making it the first central bank to do so.

UK inflation unexpectedly slowed down in September due largely to a measurement quirk, the Office for National Statistics said Wednesday.

Yet analysts said it was most likely a blip, with many predicting that inflation will shoot upwards to a decade high of above 4% before the year is out. One economist said September’s figures were “the lull before the storm.”

Consumer price index inflation slowed to 3.1% in September from 3.2% in August, the ONS said. Analysts had been expecting another 3.2% figure.

The ONS said this was largely because of “base effects.” A meal subsidy scheme launched in August 2020 pushed up year-on-year inflation in August this year. It came to an end in September 2020, which weighed on last month’s figures.

There were signs of strong inflation elsewhere. The UK, like countries around the world, has been hit by sharply rising energy prices and supply chain problems. Economists say Brexit is likely to have made the disruption worse.

Factory gate prices – at which manufacturers sell to wholesalers – rose 6.7% year-on-year in September, compared to 6% in August. The price of materials and fuels used by manufacturers rose 11.4%, up from 11.2% the previous month.

ONS head of prices Mike Hardie said the base effect quirk in the headline inflation rate was “offset by most other categories, including price rises for furniture and household goods.”

He also said food prices fell more slowly than this time last year and added: “The cost of goods produced by factories rose again, with metals and machinery showing a notable price rise. Road freight costs for UK businesses also continued to rise across the summer.”

Read more: A bullish portfolio manager admits not worrying about inflation is ‘crazy’ – but says stocks in these 3 sectors will still outperform as the S&P 500 rises 19% by 2022

The pound slipped after the figures were released and was trading roughly 0.1% lower at $1.377.

Inflationary pressure has led to tough talk at the Bank of England, the UK’s central bank. Governor Andrew Bailey said over the weekend the Bank will have to act to stamp down on inflation, which it expects to rise above 4% in the coming months.

Paul Dales, chief UK economist at Capital Economics, said: “This feels a bit like the lull before the storm.” Dales said a sharp rise in UK energy bills this month had probably lifted CPI inflation to around 3.8% in October.

Silvia Dall’Angelo, senior economist at Federated Hermes, said: “The inflation picture is set to get worse in the short term.” Yet she said inflation would cool sharply over the medium term.

Financial markets now think the BoE will raise interest rates from their record low level of 0.1% this year, making it the first major central bank to do so. Traders now expect a rise to 0.25% in November.

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Everything from going out to eat to ordering furniture is slow and annoying now. Economists have no way to measure that.

Server at a restaurant
The restaurant industry may see its recovery stall as Delta variant rages.

  • Inflation measures track prices of common goods, but they fail to capture worrying COVID-era trends.
  • The labor shortage and supply-chain crisis have simply made customer service worse in many cases.
  • Economists have no way to track this, leaving experts in the dark as they navigate the recovery.

You’ve probably been out to eat recently. If it was your first time out in a while, you noticed some changes.

That $6 beer might be $9, if you live in New York City, and the menu is probably more limited. Maybe there’s a QR code you have to scan to bring up the menu, too.

This is what economists mean when they talk about inflation and automation as big changes brought on by the pandemic.

But did you find yourself … waiting a long time for your food? Or for someone to even talk to you? Was the wait so long you got a little angry and snapped at the wait staff? (Take it easy, now, don’t make a scene.)

This is a very real thing impacting the economy, but there’s no way to measure it in any data that any economist has ever dreamed up.

The country’s top inflation measures – the Personal Consumption Expenditures price index and the Consumer Price Index – both track price changes across a wide range of goods and services. They have remained elevated in August as the Delta wave intensified and supply-chain bottlenecks worsened, but they don’t tell the story of the slow, annoying experience described above.

Restaurants’ wait times have worsened as owners scramble to staff up. Shipping delays are so bad that furniture resale is expected to become a $16 billion market. And hotels are ending once-common practices like turndown service to keep up with demand.

Inflation is changing what you get for the same pre-pandemic price and leaving Americans with worse quality than before. The total blindness of this for the economist profession shows how little we still know about what inflation actually is, and what you can’t see can hurt you.

What economists can and can’t see

One of the key features of inflation indexes like PCE and CPI is “hedonic adjustment.” As the quality of goods and services changes over time, BEA and BLS adjust prices to reflect whether you’re getting more or less for your money.

The classic example is TV sets: In the 1990s, a big screen TV cost well over $1,000, but was also massive, awkward, and generally suffered from blurry image quality. In 2021, you can get a 50-inch TV set for under $500 – a huge decline in price in and of itself – but that also has a photo-realistic 4K resolution and connects directly to the internet, allowing for instant high-definition “The Office” binge-watching sessions. That increase in quality is factored into the BLS’ price estimates for TVs, which have seen a 98% decline in their price index since 1990.

But it’s not really possible to measure hedonic changes for many things. Counting the ever-increasing number of pixels on a TV screen is one thing, but quantifying the effect of an overworked restaurant server is another.

BLS only measures hedonic adjustment for a fraction of the goods and services in the CPI basket, owing to those difficulties. Even without factoring in those hard-to-measure quality changes, prices for things like restaurant meals have been marching up since the pandemic:

Other economic commenters have noted possible hidden hedonic inflation. Alan Cole at Full Stack Economics gave the example of the subpar complementary breakfast during a recent hotel stay, while The New York Times’ Neil Irwin recently cited several examples of this kind of “shadow inflation” in an article.

From its onset, the COVID recession was different. The downturn was self-imposed as the government forced strict lockdowns and business closures. The path of recovery hasn’t been dictated by economic activity, but by the coronavirus’s spread. Now, as inflation emerges in areas beyond simple prices, it’s forcing a rethink of just how effective the typical indicators are at measuring the economy.

Each month brings a new normal for consumer spending. That’s put CPI and PCE to the test, and throughout the US economy, they’re failing to tell just how bad the situation is.

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US stocks rise as investors digest Fed minutes showing tapering on track for November

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 12, 2021.

US stocks ended higher on Wednesday as investors digested minutes from the Federal Open Market Committee’s meeting in September, which showed central bank officials broadly agreeing to begin tapering assets as soon as November, scaling back pandemic-era support for the economy.

“Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” minutes from the September 21-22 meeting said.

The tech-heavy Nasdaq outpaced the S&P 500 and the Dow, led by mega-cap tech companies such as Amazon and Microsoft as the yield on the 10-year Treasury slipped to 1.545%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Wednesday:

The minutes released were a confirmation on Fed plans but conveyed nothing unexpected, said Lawrence Gillum, fixed income strategist for LPL Financial, in a note.

“There wasn’t much new information to move markets,” he said. “The tapering process could start in either mid-November or mid-December-we still think November but one month isn’t going to matter to markets at this point. There was some interesting discussion on lift-off though and it looks like the Committee remains divided.”

The Consumer Price Index – a commonly used measure of US inflation – rose 0.4% in September, exceeding the median forecast of a 0.3% gain from economists surveyed by Bloomberg. The print shows price growth unexpectedly picking up from the 0.3% jump seen through August.

Koss surged 43% in two days after meme stock fans cheered the headphone-maker’s patent victory over Apple. Another occasional meme stock, Plug Power, climbed 13% after the hydrogen fuel-cell developer said it inked partnerships with Airbus and Phillips 66.

In cryptocurrencies, Bank of England Deputy Governor Jon Cunliffe said a collapse in the crypto market is “plausible,” and regulatory action is urgently needed.

Meanwhile, the US has unseated China as the world’s biggest bitcoin miner, accounting for a third of the global hash rate after Beijing banned all cryptocurrency transactions, data from the Cambridge Center for Alternative Finance published on Wednesday showed.

Oil prices slipped. West Texas Intermediate crude slipped 0.14% to $80.53 per barrel. Brent oil, the international benchmark, turned lower, down 0.19% to $83.26.

Russian President Vladimir Putin told CNBC the price of oil could reach $100 a barrel as global energy demand for the commodity skyrockets while supply continues to remain tight.

Gold rose 0.89% to $1,776.08 per ounce.

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US stocks edge higher as inflation data shows prices continued to surge in September

A trader works on the trading floor at the New York Stock Exchange (NYSE) at the opening of the market in New York City, U.S., August 26, 2019.

US stocks were higher on Wednesday after inflation continued to rise in September amid continued supply chain bottlenecks.

The Consumer Price Index – a commonly used measure of US inflation – rose 0.4% last month, exceeding the median forecast of a 0.3% gain from economists surveyed by Bloomberg. The print shows price growth unexpectedly picking up from the 0.3% jump seen through August.

While the Delta variant began to subside in late September, supply bottlenecks are still plaguing businesses and consumers.

Here’s where US indexes stood at the 9:30 a.m. ET open on Wednesday:

The prospect of hot inflation alongside stalled economic growth has weighed on markets, and a surge in energy prices fueled concerns that higher inflation may be less transitory than the Federal Reserve is predicting, said Nancy Davis, founder of Quadratic Capital Management and portfolio manager of an exchange-traded fund.

“If the recent pace of elevated inflation continues, that could push the Federal Reserve to start removing accommodation sooner rather than later, which could hurt stocks and other risk assets,” she said in a note Wednesday.

How inflation will affect the economy still recovering from the depths of a pandemic recession remains center stage for many economists and analysts. Fed officials have been hinting that the central bank appears on track to fully taper off assets purchases by the middle of 2022.

“Wednesday’s Consumer Price Index coincides with the start of third-quarter earnings season, and investors will be looking to see if inflation is starting to negatively affect corporate profits in a significant way,” Davis said.

JPMorgan Chase reported earnings Wednesday. The largest US bank reported third-quarter earnings that beat analyst expectations, driven by a strong performance in its investment banking division.

In cryptocurrencies, Binance will end the use of the Chinese yuan on its peer-to-peer platform. The company, which is one of the world’s largest exchanges, is set to discontinue support for the Chinese currency on December 31 this year, it said in a statement Wednesday.

Oil prices slipped. West Texas Intermediate crude slipped 0.67% to $80.12 per barrel. Brent oil, the international benchmark, turned lower, down 0.74% to $82.80.

Gold rose 0.89% to $1,776.08 per ounce.

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