Prices for US goods and services continue to rise at an unprecedented rate, jumping 7% in December from the same month last year, the seventh consecutive month in which inflation exceeded 5%. This is a record inflation since June 1982, writes The Guardian.
According to the publication, this news deals a severe blow to the Biden administration and the Federal Reserve, which until recently characterized the rise in prices as a "transient" phenomenon caused by problems with the supply chain caused by the pandemic.
On Wednesday, the U.S. Department of Labor announced that the Consumer Price Index (CPI) - which measures what consumers pay for a wide range of goods - rose 0.5% last month from November and 7% from December 2020
Rising prices of housing and used cars and trucks have the largest contribution to inflation, by 0.4% and 3.5%, respectively, compared to November. Food prices also continued to rise, although the 0.5% jump in prices was not as high as the increases seen in previous months.
Disruptions in the global supply chain caused by the pandemic are still causing shortages and rising prices for goods from cars to meat and furniture. In November, the average price of a used vehicle in the United States was $ 29,011 - 39% more than just 12 months earlier.
The Federal Reserve is now preparing to raise interest rates to curb inflation, and said it could raise interest rates threefold in 2022, perhaps in early March. The Fed has stopped calling inflation "transitional," and President Jerome Powell told Congress on Tuesday that it was time for the central bank to withdraw from emergency pandemic measures.
"What we have now is a mismatch between supply and demand. "We have a very strong demand in areas where supply is limited," Powell said.
"If we see that inflation stays high for longer than expected, we need to raise interest rates more over time, we will."
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