Inflation has risen at its highest rate in four decades, just over the past year, according to a report. This gravely affects American consumers, cuts out pay increases, and further confirms the Fed’s choice of raising borrowing rates across the economy.
On Thursday, the Labor Department announced that consumer prices increased 7.5% in January compared to a year ago, the highest year-over-year rise since February 1982.
From December through January, inflation was 0.6 %, similar to the month before and higher than economists had anticipated. Prices jumped 0.7% from October to November and 0.9% from September to October.
Rents for apartments increased 0.5% last month, the highest increase in two decades. Electricity costs soared 4.2% in January, the highest increase in the last 15 years, rising 10.7% over a year ago.
In January, the cost of household furniture and other items increased 1.6%, which is the highest month-long increase in history since 1967.
Food prices—fueled by the higher cost of eggs, dairy, and more—rose 0.9% in January. Prices for new cars remained the same as last month, but have increased 12.2% over last year. The soaring costs of new cars have increased the cost of used cars, rising 1.5% in January, and are now up 41% from the year before.
Supply and worker shortages, heavy doses of federal aid, extremely low-interest rates, and massive consumer spending all contributed to sending inflation skyrocketing in the last year. There are no signs that the rate will decrease significantly anytime soon.
The cost of living is increasing at the fastest rate, which could force businesses to increase prices to pay for increased labor costs. Warehouses and ports are overwhelmed, with workers at the ports of Los Angeles and Long Beach were sick last month. Parts and goods are in shortage as a result.
The latest inflation numbers indicated to some economists that the Fed might raise its key rate by one-half of a percentage point in March instead of the usual quarter-point increase.