US inflation soared 7% in past year, the most since 1982

Inflation jumped at its fastest pace in nearly 40 years last month, a 7% spike from a year earlier that is increasing household expenses, eating into wage gains and heaping pressure on President Joe Biden and the Federal Reserve to address what has become the biggest threat to the US economy.

 

Prices have risen sharply for cars, gas, food and furniture as part of a rapid recovery from the pandemic recession that was fueled by vast infusions of government aid and emergency intervention by the Fed, which slashed interest rates.

 

As Americans have ramped up spending, supply chains have been squeezed by shortages of workers and raw materials, reports AP.

 

“Inflation ended 2021 very hot,” said Ben Ayers, senior economist at Nationwide. Ayers and other economists say prices may cool off some as snags in the supply chain ease, but inflation will remain elevated throughout 2022.

 

The Labour Department reported Wednesday that its measure of inflation that excludes volatile food and gas prices jumped 5.5% in December, the fastest such increase since 1991. Inflation rose 0.5% overall from November, down from 0.8% the previous month.

 

Rising prices have wiped out the healthy pay increases that many Americans have been receiving, making it harder for households, especially lower-income families, to afford basic expenses.

 

 Polls show that inflation has started displacing even the coronavirus as a public concern, making clear the political threat it poses to President Biden and congressional Democrats.

 

A significant portion of inflation is still being driven by pandemic-driven mismatches between demand and supply. Used car prices have soared more than 37% over the past year because new car production has been limited by shortages of semiconductors.

 

New car prices jumped 1% in December and have soared 11.8% in the past year.

 

Source: https://www.bna.bh/en/USinflationsoared7inpastyearthemostsince1982.aspx?cms=q8FmFJgiscL2fwIzON1%2bDs71UvXHdeecl%2bUruGazXCA%3d

 

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