Rising inflation will get worse and have dire consequences for the US economy, according to one economist.

Higher prices for groceries, gasoline and most other items helped push consumer sentiment to an 11-year low in October.

“Inflation will help drive the economy into recession,” said Peter Schiff, chief economist and global strategist at Euro Pacific Capital.

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“It’s a bunch of nonsense what everyone is saying about inflation being a good problem, and it’s just a result of our strong economy,” he added. “A strong economy does not create inflation. It actually produces the opposite, because a strong economy means your economy is productive, you produce more goods and services, and supply increases. We have bottlenecks because we have a weak economy. “

According to the Department of Labor, consumer prices rose 6.2% yoy in October, the fastest increase since November 1990. Prices rose 0.9% for the month.

However, Schiff said real inflation was “far north of 10%” and “as bad, if not worse, than any year in the 1970s”. The calculation of the consumer price index was changed in the 1990s.

The passage of President Biden’s trillion-dollar non-party infrastructure package could cause prices to rise even faster, some experts say. However, the Biden government has insisted that the rise in inflation is a temporary by-product of the supply chain problems caused by the ongoing pandemic.

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Higher prices have already started to drain the disposable incomes built during the pandemic.

“While consumers have enjoyed very strong purchasing power since the pandemic began, it has recently shifted,” wrote a Bank of America research team led by US economist Michelle Meyer. “This is not because of a lack of income support, but because more of that income is being forced into higher prices.”

The real average hourly wage, adjusted for inflation, fell by 1.2% compared to the previous year. The decline is due to the fact that food and energy prices, which account for about 28% of spending on low-income consumers, rose 9.7% this year.

The double blow of higher inflation and weakening consumer sentiment has caught the attention of the Federal Reserve, which currently expects to finish tapering its bond purchases in June before raising rates. However, investors are becoming wary of the Fed’s rate hike schedule.

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The October CPI report raises “concerns that the Federal Reserve may have to hike rates earlier than previously expected,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.