With a colossal 7% rise in the last year, inflation rates across the US have skyrocketed to the highest point 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 has clearly become the biggest threat to the U.S. economy.
The Labor 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. Furthermore, 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. With the rising prices, healthy pay increases that many Americans have been receiving have also been wiped out, making it harder for households, especially lower-income families, to afford basic expenses.
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. Clothing costs rose 1.7% just in December, its second month of sharp increases, and are up 5.8% from a year ago. Gas prices dropped 0.5% in December, yet they are still 50% higher than a year ago.
With the Biden administration facing public discontent over the rise in inflation, the president has said his administration’s investments in ports, roads, bridges, and other infrastructure would help by loosening snarled supply chains- which is contrary to what numerous economists are predicting.