Inflation hit a 39-year high in December as a drop in energy costs wasn’t enough to offset a steady increase for staples such as food, rent and cars amid supply-chain bottlenecks and worker shortages.
The consumer price index jumped 7% last year, which is the fastest pace since 1982, the Labor Department confirmed on Wednesday. That’s up from 6.8% annually in November, which was also a nearly four-decade high.
Shelter costs, which make up nearly one-third of the total rose 0.4% for the month and 4.1% for the year. That was the fastest pace since February 2007.
Used vehicle prices, which have been a major component of the inflation increase during the Covid pandemic as a result of supply chain constraints that have limited new vehicle production, rose another 3.5% in December, bringing the increase from a year ago to 37.3%.
Energy prices mostly declined for the month, falling 0.4% as fuel oil was down 2.4% and gasoline fell 0.5%. Still, the complex as a whole rose 29.3% in the 12-month period, including a gain of 49.6% for gasoline.
“This morning’s CPI read really only solidifies what we already know: Consumer wallets are feeling pricing pressures and in turn the Fed has signaled a more hawkish approach. But the question remains if the Fed will pick up the pace given inflation is seemingly here to stay, at least in the medium-term,” said Mike Loewengart, managing director for investment strategy at E-Trade. “With Covid cases continuing to rise, the impact on the supply chain and labor shortages could persist, which only fuels higher prices.”
Economists expect overall inflation to ease in coming months as gasoline and other energy prices continue to pull back and crude oil prices fall, however core inflation is expected to drift higher before edging down as the supply chain issues are fixed.
ARTICLE: PAUL MURDOCH
MANAGING EDITOR: CARSON CHOATE
PHOTO CREDITS: TIMES-NEWS.COM