U.S. Inflation Highest Since Early 1980s Recession
The cost of goods and services continued to surge higher in December, with prices climbing at a 39-year high. The Consumer Price Index for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, has been generally trending up since January 2020 and increased 7.0% year-over-year in December 2021, according to the Bureau of Labor Statistics. That was the seventh consecutive month in which inflation topped 5% and the largest annual increase since June 1982 when the country was in a severe economic recession. Accounting for much of the recent increase in inflation, energy prices were up 29.3% during the year-ending December, with gasoline prices alone surging 49.6% year-over-year. Food prices were up 6.3% on an annual basis, with the increase in the price of meat (14.8%) heavily contributing to that upturn. The recent overall increase in consumer prices was also partly attributed to surging prices of pre-owned vehicles, as the price of used cars and trucks soared 37.3% in the year-ending December. Excluding food and energy prices, which can be volatile, the core CPI was up 5.5% year-over-year. However, that was still the sharpest increase in more than three decades. Recent inflation reflects a surge in demand and shortages in materials and labor. In mid-December, officials at the Federal Reserve System indicated they expect to raise interest rates several times in 2022 to slow demand and reduce inflation.