Washington: Inflation in the United States is equally hot with last month, with consumer prices see their biggest annual surge in almost four decades because the cost of rising for various items.
The Labor Department said on Thursday the Consumer Price Index (CPI) rose 7.5 percent for 12 months to January, the biggest increase since February 1982, while it rose 0.6 percent compared to December, more than analysts.
Data challenged hope by President Joe Biden’s administration that the wave of price increases swept the public approval would show signs of slowing in the first month of 2022, and further strengthening hope that the Federal Reserve would soon increase interest rates.
In a statement, Biden acknowledged that inflation was “elevated” but “fortune tellers continued to project inflation substantially ighty at the end of 2022.” “And fortunately, we saw the growth of real positive wages last month, and moderation in the price of the car, which has dealt about about a quarter of the main inflation over the past year,” he said.
A number of factors are seen as driving for price increases, the Fed’s easy money policy is intended to support the economy during the pandemic to assemble supply chains, lack of components and labor and strong demand from American consumers.
While the White House has tried to rule in an increase by announcing the initiative to increase semiconductor production and overcome alleged pricing in the meat packaging industry, the Fed is the best institution placed to stem prices.
“The truth is that the President can do very little to reduce inflation.
He can and must do everything he can in stock (and he has done most already) but will not add a lot,” Tweeted Jason Furman, a former Chairman of the Building Council Council White during the presidency of Barack Obama, who according to Biden as vice president.
“The Fed needs to climb in March,” he added.
The annual increase was the acceleration of a 7 percent increase that was seen in December, while the month-in-month changes were the same as that month, with data showing increased prices for various kinds of goods.
Food materials and other items in the category of food at home rose 1 percent, much higher than a 0.4 percent increase in December.
For a period of 12 months, they rose 7.4 percent.
Energy prices rose 0.9 percent every month, and rose 27 percent for this year, although data did show a monthly decline in gasoline prices.
Used cars, who have seen the main price increase because the economy recovers and the lack of semiconductors limits the supply of new cars, seeing prices up 1.5 percent last month, less than their increase in December.
Clothes rose 1.1 percent while taking refuge, categories including rent, up 0.3 percent.
The second increase was the same as in December.
If there is good news to be found in the report, according to Ian Sheperson from Pantheon Macroeconomics, it is in the price of new cars, which rose throughout 2021 as producers cut production due to important semiconductor deficiencies.
While they rose 12.2 percent compared to January 2021, the increase compared to December was zero, according to the data.
“This is a significant development,” Shepherdson said.
“Increased inventory, behind the increase in supply of chips, both increase sales and capping prices.
We expect the price of new vehicles to fall directly over the next few months.
Used vehicle prices will also fall.” With some economists, said the central bank was behind the curve when it came to control inflation, the Fed seat Jerome Powell said after last month’s policy meeting that they were “thoughts” to raise interest rates at their next conference starting March 15.
The comment was a tremendous signal clear about what the Fed might do, which led to speculation that the central bank could raise interest rates from zero with more than a quarter percent increase which is expected to destroy price increases.
“The Fed sees the top priority as taming inflation,” said Kathy Bosjancic of Oxford Economics after the release of CPI data.
“This strong inflation data increases the prospect of the Fed starting its tightening cycle with an increase in 50 basis-point interest rates at the March policy meeting, followed by a consecutive increase in interest rates at the next meeting.”