It's not clear how much inflation will slow. Price increases have spread to a broader range of goods and services and wages are also rising at the fastest pace in decades.
The numbers: A measure of U.S. inflation preferred by the Federal Reserve leaped 5.8% in 2021 after another sharp increase in December, underscoring why the central bank is moving to raise interest rates for the first time in four years.
The better known consumer price index jumped by an even higher 7% in 2021. That’s the largest move since 1982. The increase in the core rate in 2021 totaled 4.9%, compared to a mild 1.5% gain in the prior year. That’s the highest annual level since 1982. How come? Persistent shortages of labor and supplies that have underpinned the surge in inflation are expected to subside. Government stimulus spending has dried up. And higher interest rates are expected to dampen demand.
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