(Bloomberg). Economists have increased their U.S. inflation projections for 2022, as supply chain constraints continue and prices rise across categories such as shelter and energy.

The consumer price index will rise 5.8% at the end of the fourth quarter from a year earlier, above the 5.5% estimated a month ago, according to the median forecast of 47 economists in Bloomberg’s latest monthly survey. However, some of the projections were submitted prior to Wednesday’s October CPI data, which showed the biggest annual gain since 1990.

The survey revealed that consumer prices projections for each quarter were adjusted up to the end of the next year. 

Consumer prices increased 6.2% in October compared to a year ago. This was higher than all projections. It also reflected rising prices for food, energy and shelter. Inflation is expected to worsen due to a continuing labor shortage and supply chain problems.

“Rising employment costs suggest the risks are skewed towards higher for even longer on inflation, together with the fact a record proportion of companies expect to raise their prices further in the coming three months,” said James Knightley, chief international economist at ING. 

Economists predict that inflation gauge, personal consumption expenditures price, which is favored by Federal Reserve will rise even higher than expected. This figure is expected to rise by 4.9% annually in the fourth quarter. It was 4.6% as of the last survey.

For every quarter 2022, economic growth estimates were higher due to expectations of more government spending and private investment. These revisions were made after Congress approved an infrastructure package, which will provide $550 billion in new funding for road, bridge, and transit projects over the next few years.

“The passing of the infrastructure bill and the growing prospect of approval of the Build Back Better package gives us additional confidence in the durability of the growth story,” Knightley said.

The average hourly wage is expected to rise more than previously estimated, rising by 4% per year in the last three months of 2022 following a 3.5% October estimate. This could reflect the expectation of labor shortages continuing next year. Employers will continue offering higher wages to lure workers.

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