Investors brace for highest inflation reading in nearly 40 years

If the consensus is correct, the last time inflation was this high was in the early years of the Reagan administration – as the U.S. found itself amid a steep and persistent recession. The Labor Department on Friday morning will release November’s consumer price index, a gauge that measures the cost of dozens of items. The index covers common goods including gasoline and ground beef, but extends into more detailed purchases such as frozen vegetables, indoor plants and flowers and pet supplies.

Wall Street expects the the index to reflect a 0.7% gain for the month, which would translate into a 6.7% increase from a year ago, according to Dow Jones estimates. Excluding food and energy, so-called core CPI is projected to rise 0.5% on a monthly basis and 4.9% on an annual basis. If those estimates are correct, it would be the highest year-over-year reading for headline CPI since June 1982, when the index surpassed 7% after topping out at over 14% in both March and April 1980, a record that still stands. On core, the level would be the highest since June 1991.

The Fed already is reacting to inflation and is soon to do more. At its meeting next week, the central bank is expected to speed up the pace at which it is withdrawing economic support. In practice, that means likely doubling the taper in bond purchases to $30 billion a month. That would bring a program that had seen $120 billion a month in purchases to an end by around March 2022. After that, the Fed could start raising interest rates if inflation is still a problem.

-Wall Street expects the the consumer price index on Friday to reflect a 0.7% gain for November, which would translate into a 6.7% increase from a year ago.

-If that is accurate, it will mark the highest year over year level since 1982.