Inflation soared 7% in 2021, driven by gas and used-car prices:
WASHINGTON — Prices paid by U.S. consumers jumped 7% in December from a year earlier, the highest inflation rate since 1982 and the latest evidence that rising costs for gasoline, vehicles, food, rent and other necessities are heightening the financial pressures on America's households.
Inflation did slow slightly on a month-to-month basis: The Labor Department's report Wednesday showed that consumer prices rose 0.5% from November to December, down from increases of 0.8% and 0.9% in the previous two months. Rising prices have wiped out the healthy pay increases that many Americans have been receiving, making it harder for households, especially lower-income families, to afford basic expenses. Poll show that inflation has started displacing even the coronavirus as a public concern, making clear the political threat it poses to President Joe Biden and congressional Democrats.
Those rate increases would likely increase borrowing costs for home and auto purchases as well as for business loans, potentially slowing the economy. The rate hikes also mark a sharp reversal in policy by Fed policymakers, who as recently as September had been split over whether to raise rates even once this year. The Fed is also rapidly ending its monthly bond purchases, which were intended to lower longer-term interest rates to encourage borrowing and spending.
Yet for now, the supply problems have persisted, and though there are signs that they are loosening in some industries, Powell acknowledged that progress has been limited. He noted that many cargo ships remain docked outside the port of Los Angeles and Long Beach, the nation’s largest, waiting to unload.
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