Inflation hits three-decade high as October prices rise 6.2%
US prices rose at the fastest pace in almost 30 years as fuel and food prices soared propelled by oil costs and supply chain malfunctions.
The annual inflation rate accelerated 6.2% in October from 5.4% the previous month, marking the largest year-on-year advance since November 1990.
The consumer price index went up 0.9% last month after jumping 0.4% in September, well above the 0.6% analysts estimate for October.
The Bureau of Labor Statistics reported earlier today that the price surge was broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors.
Core inflation, which excludes volatile prices including fuel and agriculture products, climbed 0.6%, while year-on-year the so called underlying inflation advanced 4.6% from 4% a month earlier.
October inflation is likely to put pressure on the US central bank to increase interest rates in the coming months, as recently the Fed has taken unprecedented steps in recent years to keep rates low.
Rising inflation in recent months has also put pressure on insurance pricing, as renewal rates accelerated across commercial lines in the third quarter of the year.
The latest pricing report from the insurance software and servicing provider Ivans showed most lines hit renewal rate lows in July or August before surging toward the end of the quarter.
The largest increase in Q3 came in umbrella coverage, where premium renewal rate change averaged 4.85%, rising from 4.40% in Q2, while general liability Q3 premium renewal rates rose 4.21%, compared with 3.95% a year ago.
In commercial property, the average premium renewal rate change increased to 5.77% for the quarter, from 5.54% in Q2, but the rise in commercial auto slowed down as average premium renewal rate in Q3 was 4.32%, down from the previous quarter’s 4.51%.
Overall insurance rates have been going up throughout the year as the industry approaches the January reinsurance renewals.
As reinsurance renewal negotiations are picking up, inflation and its potential impact on loss-cost trends has become a central theme.
RenaissanceRe’s chief underwriting officers for property and casualty/specialty Justin O’Keefe and David Marra reinforced this view, citing inflation dynamics as among the top challenges for the renewal.
Inflation was also among the top topics discussed during this year’s APCIA conference in Denver.
Experts said that inflation, catastrophe losses and cyber risk present the most pressing issues the P&C industry must grapple with as it seeks to capitalize on a period of rate rises and robust growth.