Washington, Jan. 12 (BNA): Inflation jumped at its fastest pace in nearly 40 years last month, a 7% rise from the previous year, slashing household expenses, weighing on wage gains and increasing pressure on President Joe Biden. and federalism. Reserve to counter what has become the biggest threat to the US economy.
Prices of cars, gas, food and furniture rose sharply as part of a rapid recovery from the pandemic recession fueled by massive injections of government aid and emergency intervention by the Federal Reserve, which led to lower interest rates.
As Americans ramp up spending, supply chains have been squeezed by a shortage of workers and raw materials, according to the Associated Press.
“Inflation ended very high in 2021,” said Ben Ayers, chief economist at Nationwide. Ayers and other economists say prices may calm down some as supply chain hurdles recede, but inflation will remain high throughout 2022.
The Labor Department said Wednesday that its measure of inflation that excludes volatile food and gas prices jumped 5.5% in December, the fastest increase since 1991. Inflation rose 0.5% overall from November, down from 0.8% the previous month.
Rising prices have wiped out the healthy wage increases that many Americans were receiving, making it difficult for families, especially low-income families, to afford basic expenses.
Polls show that inflation is beginning to dislodge even the coronavirus as a public concern, illustrating the political threat it poses to President Biden and Democrats in Congress.
Much of the inflation is still driven by mismatches between demand and supply due to the pandemic. Used car prices have risen more than 37% over the past year because production of new cars has been limited due to a shortage of semiconductors.
New car prices jumped 1% in December and are up 11.8% last year.
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