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Inflation Hits Highest Rate Since 1982
From The Wall Street Journal: U.S. inflation accelerated to a 7.5% annual rate in January, reaching a new four-decade high as strong consumer demand and pandemic-related supply constraints kept pushing up prices.
The Labor Department on Thursday said the consumer-price index—which measures what consumers pay for goods and services—was last month at its highest level since February 1982, when compared with January a year ago, and higher than December’s 7% annual rate. Inflation has been above 5% for the past eight months…
Used-car prices continued to drive overall inflation, rising 40.5% in January from a year ago. A sharp uptick in housing rental prices also contributed to last month’s increase.
Food prices surged 7%, the sharpest rise since 1981. Restaurant prices rose by the most since the early 1980s, pushed up by an 8% jump in fast-food prices from a year earlier. Grocery prices increased 7.4%, as meat and egg prices continued to climb at double-digit rates.
The January number includes a once-a-year revision that affects seasonally adjusted data for the past five years. The Labor Department also updated the list of goods included in the calculation, known as a spending basket, to reflect consumer habits in 2019 and 2020…
“This is not encouraging news for the Fed in its battle to get inflation heading back towards the 2% target,” said James Knightley, chief international economist at ING. “Rate hikes will do nothing to resolve supply chain strains and worker shortages, but they can contribute to taking some of the steam out of the economy and allow demand and supply to start moving towards a better balance, at the expense of weaker growth…”
The economy expanded 5.5% last year, the fastest pace since 1984. That brisk growth is powered by a strong labor market. Employers added 1.6 million jobs over the past three months, putting upward pressure on wages. With inflation well above the Fed’s target, the steady gains in hiring leave the Fed on track to raise interest rates next month and could prompt further increases in May and June…
Alex Mishkit launched her salon, Alex Cher Beauty, a year ago. Since then, she has increased prices to keep up with the rising costs of key supplies. First it was the nitrile gloves, which leapt as much as 30%. Then the price of waxing sticks shot up, followed by the price of wax itself, which rose by around 15%.
“To a small-business owner going on her second year, it adds up. So I’m hyper-aware of the slightest increase because every dollar counts,” she said. With overall supply costs running between 10% and 15% more than they were when she opened her doors, Ms. Mishkit in December nervously announced a price increase of around 10%. To her surprise, she said, customers were supportive.
What do you think? Share in the comments!
(Excerpt from The Wall Street Journal. Photo Credit: Unsplash)
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Father God in Jesus name ,I pray that you give your children the faith to overcome that rise in the cost of living. I trust you – Lord that you above our circumstances and that you will make a way where there seems to be no way. Let you children speak life. We know the God we serve who will protect us because he loves us.