The Consumer Price Index for November was released last week and inflation for the past year is at the highest level in nearly 40 years. The year-over-year increase in inflation is now at 6.8%, while the core inflation rate that excludes more volatile energy and food prices is at 4.9%.
The pandemic has put pressure on prices across many sectors of the economy, while the amount of monetary and fiscal stimulus has also been very high. Over the coming quarters, the impact of these two factors will play out in both policy decisions and asset prices. Central bankers will have more pressure on them during the next several meetings to address the impact of inflation, as employment has significantly recovered from the shock of the pandemic in 2020.
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