The U.S. Consumer Price Index (CPI) posted its biggest gain in over 30 years with a 6.2% increase compared to last year. This was more than what economists were expecting at 5.9%. On a monthly basis, CPI increased by 0.9%, higher than expectations of 0.6%.

The reality of rising prices isn't surprising to anyone who has filled up their gas tank or shopped for food recently. However, what is a more contentious topic is whether this is a mere inflation flare-up or is it some sort of new inflationary regime.

One's opinion on this matter has major implications for investors in terms of where asset prices are heading. A current concern among investors is stagflation, and there is evidence that the economy is trending in that direction. The recent gains in inflation have negated wage growth, while many are concerned that the economy could actually start contracting next year due to inflation and slowing consumer spending.

These bearish concerns were given credence with the October inflation data which also showed core CPI rising 4.6% which was the most since August 1991.

Some of the categories with the biggest price increases were fuel prices which were up 12.3% for the month and 59.1% over the past year. Used car prices also rose 2.5% on the month and 26.4% up for the year. New car prices were up 1.8% and 9.8% as well. As a result of these increases, real wages actually fell by 0.5%.

Housing cost increases also hit pocketbooks as shelter costs increased 0.5% for the month and 3.5% compared to last year. Gains in shelter prices add to evidence that inflation gains are more than transitory.

This is in contrast to policymakers like Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen who have consistently described the rise in inflation as being transitory. If inflation doesn't fall on its own, it could increase the odds of the Fed getting more hawkish and could marginally reduce the odds of President Biden's reconciliation package given inflation concerns cited by many lawmakers in recent weeks.

Stock prices were weak following the report as it implies negative pressure on corporate margins and consumer spending in addition to a potentially more hawkish Fed.