US consumer prices surge, inflation close to peaking

i24NEWS - Reuters

3 min read
A shipment of cars and trucks sits inside PortMiami in Florida, the United States, December 16, 2021.
AP Photo/Rebecca BlackwellA shipment of cars and trucks sits inside PortMiami in Florida, the United States, December 16, 2021.

In 12 months through December 2021, the CPI rose seven percent, the biggest increase since 1982

Consumer prices in the United States posted their largest annual surge in nearly 40 years, shown in a report from the Labor Department on Wednesday.

The report followed data posted last week showing that the labor market was at or near maximum employment.

Federal Reserve (Fed) Chair Jerome Powell said Tuesday that the US central bank was ready to do what was necessary to keep high inflation from becoming “entrenched.”

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High cost of living, as a result of the supply chain crisis from Covid, is bolstering expectations that the Fed will begin raising interest rates as early as March.

"They are going to have to raise rates four or more times this year and potentially more than that next year," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

The consumer price index (CPI) rose 0.5 percent last month after advancing 0.8 percent in November.

In 12 months through December, the CPI rose seven percent, the biggest increase since 1982.

US President Joe Biden noted that every nation was afflicted with inflation as the global economy recovers from the pandemic.

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"This report underscores that we still have more work to do, with price increases still too high and squeezing family budgets," Biden said.

Soaring Covid cases driven by the omicron variant could slow progress towards normalization of supply chains, too, and inflation is likely to remain above target in 2022.

"Inflation for many other goods and services will be higher in 2022 than before the pandemic, due to higher labor costs and input prices. Housing will also contribute to high inflation in 2022,” said Gus Faucher, chief economist at PNC Financial.