Inflation In America : Cost Of Living Back In The Spotlight

The American inflation, which had shown signs of easing in recent months, is on the rise again, putting the cost of living back at the center of national concerns. In October, the inflation rate reached 2.6 %, compared to 2.4 % in September, marking a reversal in the fierce battle to stabilize prices. This return of inflation occurs in a fragile economic context, where every variation in price indices is scrutinized for its potential impact on purchasing power, monetary policy, and the political landscape.

Rising Inflation and Its Main Causes

In October, inflation in the United States rebounded, despite the unexpected return of the money printing press, with an annual rate of 2.6 % according to data from the Department of Labor. This rebound, after several months of stabilization, was mainly driven by rising costs in the housing sector. The department specifies that “more than half of the increase in one month” comes from this category of expenses. Furthermore, it thus highlights the considerable weight of housing in American household spending. This monthly increase of 0.2 % follows that of the previous month, confirming a trend that could sustainably impact household budgets.

For the Biden administration, this increase constitutes a significant challenge, as expressed by Lael Brainard, the President’s chief economic adviser. “We will continue to fight to reduce costs for families in key areas, such as housing and healthcare,” she stated. The goal remains clear: to relieve families and avoid policies that could compromise current efforts to control inflation. Thus, the reaction of the stock market has been cautious, with a slight rise recorded on Wall Street, the Dow Jones up by 0.15 % and the Nasdaq by 0.13 % at the start of trading.

The Political Dimensions and Perspectives of Inflation

This rebound in inflation in the United States also reverberates in the political sphere, notably with the return of Donald Trump, who has seized on the issue to criticize the economic policy of the Biden administration. The surge in prices since 2021, with nearly 20 % for essential goods such as eggs and gasoline, has become one of the main campaign arguments for the elected president. Trump has promised a reduction in inflation through protectionist measures, although UniCredit economists estimate that his tariff increases could, on the contrary, add 1.3 percentage points to annual inflation. Samuel Tombs, chief economist for Pantheon Macroeconomics, even warns that “Donald Trump’s economic policy agenda threatens to prevent inflation from returning to the 2 % target set by the Fed.”

For the crypto market, sustained inflation in the United States could strengthen interest in alternative assets, often perceived as hedges against monetary devaluation. However, high interest rates could affect liquidity in the crypto market, which decreases investment flows into risky assets. However, if inflation remains persistently above the Fed’s target, investors may turn to Bitcoin and other cryptos to diversify their portfolios in the face of a weakened dollar.

Ultimately, this rebound in inflation could weigh on the monetary strategy of the United States in the coming months, impacting both political decisions and the daily lives of Americans. As the Fed adjusts its policy, the issue of purchasing power continues to fuel debates and could redefine the economic and political priorities of the country in the near future.