Inflation is rising at its fastest rate since 1982, according to Labor Department figures released Wednesday.
The Consumer Price Index — a figure which measures how much Americans are paying for consumer goods and which economists use to quantify inflation — rose at a 7 percent annualized rate last month in comparison to December 2020, the department said.
It was “the largest 12-month increase since the period ending June 1982,” the agency said, before adding: “The all items less food and energy index rose 5.5 percent, the largest 12-month change since the period ending February 1991. The energy index rose 29.3 percent over the last year, and the food index increased 6.3 percent.”
On a seasonally adjusted, monthly basis, the CPI rose 0.5 percent in December, the news release noted.
“There is still tremendous momentum when it comes to inflation right now. While inflation is likely to peak in the next few months, the overall pace is going to remain a challenge for consumers, businesses and policy,” Wells Fargo director and senior economist Sarah House told The Wall Street Journal.
As CNBC noted, rising inflation comes as the U.S. economy is dealing with a shortage of workers and goods amid a spike in coronavirus cases.
“Fed officials are watching the inflation data closely and are widely expected to raise interest rates this year in an effort combat increasing prices and as the jobs picture approaches full employment,” the outlet reported. “Though the central bank uses the personal consumption expenditures price index as its primary inflation measure, policymakers take in a wide range of information in making decisions.”
E-Trade managing director for investment strategy Mike Loewengart said inflation might not be going away any time in the near future.
“This morning’s CPI read really only solidifies what we already know: Consumer wallets are feeling pricing pressures and in turn the Fed has signaled a more hawkish approach. But the question remains if the Fed will pick up the pace given inflation is seemingly here to stay, at least in the medium-term,” he told CNBC.
“With COVID cases continuing to rise, the impact on the supply chain and labor shortages could persist, which only fuels higher prices,” he added.
According to the New York Post Editorial Board, President Joe Biden — and his spending habits — deserve plenty of blame.
“The prez and his party can no longer escape blame for the Bidenflation Tax, which hits poorer Americans hardest. Despite warnings (from even their own party mates, like former Treasury Secretary Larry Summers), Dems last year unilaterally pumped $1.9 trillion into an economy that was already rebounding, paid workers bonuses to stay off the job and did little to address predictable supply-chain clogs,” the Editorial Board wrote Wednesday.
“The Fed, meanwhile, kept interest rates low and continued to bloat the money supply by buying up bonds, to the tune of $120 billion a month.”
Democrats ought to ease up on the spending habits — but they wont, the editorial added.