US sees highest increase in inflation in 40 years fueled by 7.5% surge in consumer prices
India Today
Soaring inflation has reduced purchasing power for households and eroded President Joe Biden's popularity. This is despite the economy growing at its strongest rate in 37 years in 2021.
U.S. consumer prices rose solidly in January, leading to the biggest annual increase in inflation in 40 years, which could fuel financial markets speculation for a 50 basis points interest rate hike from the Federal Reserve next month.
The consumer price index gained 0.6% last month after increasing 0.6% in December, the Labor Department said on Thursday. In the 12 months through January, the CPI jumped 7.5%, the biggest year-on-year increase since February 1982.
That followed a 7.0% advance in December and marked the fourth straight month of annual increases in excess of 6%. Economists polled by Reuters had forecast the CPI rising 0.5% and accelerating 7.3% on a year-on-year basis.
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Effective with the January report, the CPI was re-weighted based on consumer expenditure data from 2019-2020.
The economy is grappling with high inflation, caused by a shift in spending to goods from services during the COVID-19 pandemic. Trillions of dollars in pandemic relief fired up spending, which ran against capacity constraints as the coronavirus sidelined workers needed to produce and move goods to consumers.
Soaring inflation has reduced purchasing power for households and eroded President Joe Biden's popularity. This is despite the economy growing at its strongest rate in 37 years in 2021 and the labor market rapidly churning out jobs.
