Inflation Hit Highest Pace in 39 Years at Close of 2021

Washington, DC, January 12, 2022-U.S. inflation closed out 2021 at its highest level since 1982 as robust consumer demand exacerbated pandemic-related supply shortages, reports the Wall Street Journal.

“The Labor Department said the consumer-price index-which measures what consumers pay for goods and services-rose 7% in December from the same month a year ago, up from 6.8% in November. That was the fastest pace since 1982 and marked the third straight month in which inflation exceeded 6%.

“The so-called core price index (CPI), which excludes the often-volatile categories of food and energy, climbed 5.5% in December from a year earlier. That was a bigger increase than November’s 4.9% rise, and the highest rate since 1991.

“On a monthly basis, the CPI increased a seasonally adjusted 0.5% in December from the preceding month, decelerating from October and November.

“‘There’s still a lot of scarcity in the economy. Consumers and businesses are in great financial shape, and they’re willing to pay up for more goods, more services and more labor,’ said Sarah House, director and senior economist at Wells Fargo, pointing to reasons for the ‘blistering pace of inflation.’

“Prices for autos and other durable goods continue to drive much of the inflationary surge, fueled by largely pandemic-related imbalances of supply and demand that most economists expect to fade as Covid-19’s impact on economic activity eases.

“Federal Reserve Board Chairman Jerome Powell in congressional testimony Tuesday said he was optimistic supply-chain issues would ease this year and help bring inflation down.”