As the new year started, United States consumer prices increased more than it has in four decades, using up the savings of Americans, making the buying power of paychecks disappear, and putting pressure on the Federal Reserve to raise interest rates starting in March.
The consumer price index went up 0.6 percent from a month before, the Department of Labor said Thurs.. Compared with Jan. of last year, consumer prices have increased 7.5 percent.
Economists had thought prices would increase 0.4 percent monthly and 7.2 percent more than a year ago’s prices.
In Dec., prices went up 0.6 percent compared with Nov.. Prices were up 7% for the whole year of 2021, the worst yearly inflation since 1982.
Except for energy components and the volatile, core prices increased by 0.6 percent. The measure soared 6% from the past year. Both were above what the economist expected.
Even though anti-Trump journalists and a lot of the economist claimed Pres. Donald Trump’s tariffs would cause prices to rise, consumer prices stayed low throughout his administration. Pres. Trump’s tariffs ended up not being taxes on consumers. Instead, they were used by Chinese exporters and producers and the profit margins of most of the large United States companies.
Inflation started to speed up last March following years of coming in under the Fed’s 2% target. The Fed had made the decision to keep interest rates low although the economy was getting better faster than expected. Also, the Biden administration went through billions of dollars of deficit spending in the American Rescue Plan. These combined and increased the demand for services and goods faster than supplies could increase, raising up prices.
The public’s perception of Pres. Biden’s competence has dropped. A lot of Americans interpreted the administration believing that inflation would get better to be a sign that they didn’t care about the hardships put on families paying more for groceries, gasoline, and Christmas gifts. The administration trying to put blame on corporate greed for high prices did not work. Although the Biden administration announced the largest ever release of oil from the government’s emergency reserve which is an asset that is normally held on to tightly and used only for events like wars or natural disasters–gasoline and oil prices have kept on rising to the highest level in years.
Polls show the public’s rating of Joe Biden’s handling of the economy is lower than it has ever been. Pres. Biden’s total approval rating has plummeted. 45 percent of Americans say inflation has put a strain on their household finances.