Inflation soared over the past year at its highest rate in four decades, hammering America’s consumers, wiping out pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy.
WASHINGTON — that consumer prices jumped 7.5% last month compared with a year earlier, the steepest year-over-year increase since February 1982. The acceleration of prices ranged across the economy, from food and furniture to apartment rents, airline fares and electricity.
Prices for a broad range of goods and services accelerated from December to January — and not just for items directly affected by the pandemic. Apartment rental costs rose 0.5% in January, the fastest pace in 20 years. Electricity prices surged 4.2% in January alone, the sharpest rise in 15 years, and are up 10.7% from a year earlier. Last month, household furniture and supplies rose 1.6%, the largest one-month increase on records dating to 1967.
Among the Americans who are struggling with pricier food and gas is Courtney Luckey, who has changed her shopping habits and taken on additional work shifts at a grocery store in Charlotte, North Carolina, where she lives. All her forced additional spending has caused Luckey to pull back on the family activities, such as bowling, with her daughter, her brother and his two sons. Those outings now typically happen once a month, rather than every week or two.
Over time, those higher rates will raise the costs for a wide range of borrowing, from mortgages and credit cards to auto and business loans. That could cool spending and inflation, but for the Fed, the risk is that in steadily tightening credit, it could trigger another recession. Chipotle said it’s increased menu prices 10% to offset the rising costs of beef and transportation as well as higher employee wages. And the restaurant chain said it will consider further price increases if inflation keeps rising.
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