The increase in inflation over the same period was the highest since June 1982. Inflation increased in the context of a lack of supply of goods and human resources when the US economy received a huge amount of money.
In December 2021, inflation in the US increased by the most in 12 months and reached the highest level in nearly 40 years, according to the latest report released by the US Department of Labor on Wednesday.
Brian Price, head of investment management at Commonwealth Financial Network, commented: “The news that the CPI has increased by 7% in the last 12 months will shock many investors because we have never seen that number for nearly 40 years. However, it’s also a number that many have been anticipating and we could see it in the bond market as long-term yields fell significantly this morning.”
Excluding food and energy prices, the core CPI increased by 5.5% year-on-year and by 0.6% month-on-month. Experts’ calculations give figures 5.4% and 0.5%. With core inflation, this is the highest increase since February 1991.
The housing price index, which contributes about 30% of total costs, increased by 0.4% in the month and 4.1% over the same period last year, the strongest increase since February 2007.
Used vehicle prices have been by far a key inflation booster during the COVID-19 pandemic as supply chain constraints limit production of new equipment. The price index of used products increased by 3.5% in December, a year-on-year increase of 37.3%.
In contrast, the prices of energy products fell during the month. The recorded decline was estimated at 0.4% because the price of raw oil dropped by 2.4% and the price of gasoline decreased by 0.5%. In general, the price of energy products in general increased by 29.3% in 12 months, the price of gasoline alone increased by 49.6%.
Fed officials are keeping a close eye on inflation data and are expected to raise interest rates in the dollar this year in an effort to combat overheating in prices and a robust job market. steady. Although the central bank uses consumer spending as its primary indicator of inflation, policymakers still need to take into account a variety of other information to make decisions.
Mike Loewengart, managing director of investment strategy at E-Trade, commented: “The latest CPI news only reinforces what we already know: Consumers are under a lot of price pressure. Both and as a result, the Fed took a tough approach. However, there are still doubts about whether the Fed will increase the pace of policy tightening as inflation will remain high, at least in the medium term. As the number of COVID-19 cases continues to rise, the impact of supply chains and labor shortages is likely to persist.”
High inflation has “shredded” the salary increase of workers. However, real hourly earnings rose very slightly by 0.1% on the month. If calculated on a year-on-year basis, the real income of workers decreased by 2.4%, according to BLS calculations.
