Inflation soared over the past year at its highest rate in four decades, hammering American consumers, wiping out pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy.
The Labor Department said that consumer prices jumped 7.5% last month compared with a year earlier, the steepest year-over-year increase since February 1982.
Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation leaping in the past year.
James Bullard, the president of the St. Louis Federal Reserve Bank, told Bloomberg News that he supported a sharp increase of a full percentage point in the benchmark short-term interest rate by July.
Federal Reserve Chair Jerome Powell signaled two weeks ago that the central bank would likely raise its benchmark short-term rate multiple times this year.
Stock prices declined after the inflation report was released and fell further after Bullard’s remarks.
Prices for a broad range of goods and services accelerated from December to January —to name the few;
- Apartment rental costs rose 0.6% in January, the fastest pace in 20 years.
- Electricity prices surged 4.2% the sharpest rise in 15 years, and are up 10.7% from a year earlier.
- Household furniture and supplies rose 1.6%, the largest one-month increase on records dating to 1967.
- Food costs, increased 0.9% in January,
The surge in new-car prices has accelerated used-car prices, and are up a staggering 41% from a year ago.