Inflation jumped in December at its fastest year-over-year pace in nearly four decades, surging 7% and raising costs for consumers, offsetting recent wage gains and heightening pressure on President Joe Biden and the Federal Reserve to address what is increasingly Americans’ central economic concern.
The Labor Department reported this morning that, excluding volatile food and gas prices, so-called core prices surged 0.6% from November to December, slightly more than the 0.5% increase from October to November. Measured year over year, core prices jumped 5.5% in December, the fastest such increase since 1991.
A significant portion of consumer inflation is still being driven by pandemic-driven mismatches between demand and supply. Used car costs rose 3.5% from November to December and have soared more than 37% compared with a year ago. With new car production restrained by shortages of semiconductors, consumers have snapped up used cars, forcing up their costs.
Shortages at U.S. grocery stores have also grown more acute in recent weeks as new problems, like the omicron variant and severe weather, have compounded the supply chain struggles and labor shortages that have plagued retailers since the coronavirus pandemic erupted.
On Tuesday, Chair Jerome Powell told Congress that the Federal Reserve is prepared to accelerate the interest rate hikes it plans to begin this year if it deems it necessary to curb high inflation. Read the full story.
