Inflation rate in the United States reached its highest level since the year 1982 in the fourth quarter of 2021, as strong consumer demand worsened supply shortages caused by the epidemic.
The consumer price index, which measures how much people pay for goods and services, increased to 7% in December from 6.8% in November, according to the Labor Department. This was the fastest rate of inflation since 1982, and it was the third month in a row that inflation surpassed 6%.
In the month of December, the core price index, which excludes the sometimes volatile categories of food and energy, increased by 5.5 percent year over year. It was the highest rate since 1991, and it was higher than November’s 4.9% gain. The CPI gained a seasonally adjusted 0.5 percent in December from the previous month, slowing down from October and November.
“There’s still a lot of scarcity in the economy. Consumers and businesses are in great financial shape, and they’re willing to pay up for more goods, more services and more labor,” noted Sarah House, director and senior economist at Wells Fargo, pointing towards the reasons for the existing “blistering pace of inflation.”
Auto and other durable goods prices continue to drive most of the inflationary rise that’s taking place, propelled by largely pandemic-related supply and demand mismatches that most economists predict to fade as the impact of Covid-19 on economic activity fades.
In congressional testimony Tuesday, Jerome Powell, the Federal Reserve Board Chairman, expressed optimism that supply-chain difficulties will be resolved this year, lowering inflation.
The early effects of the Omicron variant of the coronavirus, which is posing a new danger to the economy as the epidemic approaches its third year, is also shown in the December inflation statistics.
The U.K. and U.S. inflation rates have been taking a toll recently. The countries are under immense pressure to reduce the inflationary rates since it causes discomfort to its citizens.