Inflation soared over the past year at its highest rate in four decades, hammering America’s consumers, wiping out pay raises, and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy. The Labor Department said Thursday that consumer prices jumped 7.5% last month compared with 12 months earlier, the steepest year-over-year increase since February 1982. It was higher than the Dow Jones estimate of 7.2%, notes CNBC. When measured from December to January, inflation was 0.6%, the same as the previous month and more than economists had expected. Prices had risen 0.7% from October to November and 0.9% from September to October, reports the AP.
"This is not encouraging news for the Fed in its battle to get inflation heading back towards the 2% target," ING chief international economist James Knightley tells the Wall Street Journal. "Rate hikes will do nothing to resolve supply chain strains and worker shortages, but they can contribute to taking some of the steam out of the economy and allow demand and supply to start moving towards a better balance, at the expense of weaker growth."
CNBC looks at costs in various categories, among them, vehicle costs, "which have been one of the biggest inflation contributors." In January, prices were unchanged for new models and increased 1.5% for used cars and trucks. Those segments have risen 12.2% and 40.5%, respectively, over the past 12 months. CNN adds that food prices rose 0.9% in January, an increase over the 0.5% uptick in December. And there are few signs that inflation will slow significantly anytime soon. Most of the factors that have forced up prices since last spring remain in place: Wages are rising at the fastest pace in at least 20 years. Ports and warehouses are overwhelmed, with hundreds of workers at the ports of Los Angeles and Long Beach, the nation’s busiest, out sick last month.
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