In December, consumer prices in the United States are believed to continue to go up at the quickest rate in over four decades.
Cost of Living Continuously Goes Up
As the cost of products and services rises, consumers continue to pay for them.
Based on Bloomberg statistics, this met consensus predictions, although it increased from November’s 6.8% gain. Consumer prices increased 0.5 percent month over month in December, slightly more than the predicted 0.4 percent increase, marking the 18th consecutive month of price rises.
At the end of 2021, the Bureau of Labor Statistics’ December Consumer Price Index (CPI) declared an annual increase of 7.0 %, by far the fastest increase since 1982.
Many analysts responded to the study by acknowledging the decades-long rise in prices but anticipating a slowdown in the pace of price rises this year. Others speculated that the recent data will lead the Federal Reserve to act more aggressively and quicker than expected to contain increasing inflation.
Important Conclusions from Experts
The CPI data, according to Rick Rieder, BlackRock’s global fixed income chief investment officer, reveals that consumers are unusually eager to continue paying for increasingly expensive products and services.
He stated in his email that this is a very unique period in history, and most market participants have never seen demand surpass supply in the real economy in their lives, with certain sectors implying that price is no object, as published by Yahoo Money news.
He went on to say that supply constraints in industries like housing, consumables, technology, new and used vehicles, among other things, have been causing inflation for a few months now, and that those supply shortages are mainly still in place today.
Despite the fact that costs have remained consistently high, demand has continued to rise a swell. Considering the Omicron virus’s rapid spread, the return to normalcy takes a longer process than usual.
According to many analysts, the latest inflation data confirms that the Federal Reserve will need to raise rates four times this year, up from three in December’s last Summary of Economic Projections.
Consumers Under High Pressure
Inflation pressures in the United States, according to James Knightley, chief international economist at the financial services firm ING, are not slowing down. Since Thatcher and Reagan’s time, it hasn’t been this high. It’s possible that we’re nearing the end of the cycle, but there’s a chance that inflation may continue to rise.
Since the early 1980s, the United States hasn’t seen anything like it. In response, Fed Chair Paul Volcker pushed interest rates to excruciating levels, sending the economy into a prolonged recession in 1980.
When the prime rate for banks’ best clients topped 20%. Volcker, on the other hand, was able to control inflation, which had been in the double digits year over year for much of 1979 to 1981, according to the news published by the Los Angeles Times paper.
Inflation isn’t only a concern in the United States. Inflation increased 5% in December compared to the previous year across the 19 euro-zone nations, the highest increase on record.