Consumer prices rise at fastest pace in 39 years

WASHINGTON — U.S. consumer prices rose 5.7% over the past year, the fastest pace in 39 years, as a surge in inflation confronts Americans with the holiday shopping season underway.

The November increase, reported Thursday by the Commerce Department, followed a 5.1% rise for the 12 months ending in October, continuing a string of annual price gains that have run well above the 2% inflation target set by the Federal Reserve.

Consumer spending, which accounts for 70% of U.S. economic activity, rose 0.6% in November, a solid gain but below the 1.4% surge in October.

Personal incomes, which provide the fuel for future spending increases, rose 0.4% in November, slightly lower than the 0.5% increase in October. Both gains came after a 1% plunge in incomes in September, the month that government benefit programs such as expanded unemployment benefits came to an end.

The big jump in the Commerce Department’s price gauge was similar to the rise in the consumer price index, up 6.8% for the 12 months ending in November, also the biggest surge by this measurement in 39 years.

While the CPI is the better known price gauge, the Federal Reserve prefers to follow the Commerce Department’s personal consumption expenditures price index in setting its interest-rate policies to fight inflation. The PCE price index tracks the actual purchases consumers are making each month while the CPI follows a fixed market basket of goods.

The 5.7% increase for overall inflation was the fastest 12-month gain since a 5.8% increase for the 12 months ending in July 1982.