U.S. consumer prices accelerated in the year through December at their fastest pace in 39 years, new government data shows, marking the seventh straight month of inflation running above 5 percent and a fresh sign that inflationary woes continue to weigh on American consumers.
The Bureau of Labor Statistics (BLS) reported on Jan. 12 that the Consumer Price Index (CPI), which reflects inflation from the perspective of end consumers, rose 7.0 percent in the 12 months through December, a level not seen since June 1982, when it hit 7.2 percent.
“This is not a lucky number 7,” Bankrate Chief Financial Analyst Greg McBride told The Epoch Times in an emailed statement, in which he noted that the pace of inflation was “far outstripping the wage growth of most Americans and squeezing the buying power of households.”
A separate government report showed that real average hourly earnings, which are adjusted for inflation, fell 2.4 percent in the 12 months through December. Without adjustment for the pace of inflation, average hourly earnings rose 4.7 percent over the year.
“The headline rate of inflation accelerated on an annual basis, hitting 7 percent, but did decelerate on a monthly basis for the second month in a row, owing to a decline in energy and slower increases in food prices,” McBride said.
On a monthly basis, the CPI inflation gauge rose 0.5 percent in December after November’s 0.8 percent jump, suggesting a slight easing of inflationary pressures.
Still, so-called core consumer prices, which strip out the volatile categories of food and energy, continued to rise at an outsized pace. Core inflation rose 5.5 percent in the year through December, the fastest pace in nearly 31 years.
“Notable increases were seen in the food and shelter categories, with the usual suspects of used vehicles rising 3.5 percent, apparel up 1.7 percent, household furnishings increasing 1.1 percent, and new vehicles climbing another 1 percent—all just in the month of December,” McBride said.
Annual CPI inflation has now been running at over 5 percent for seven straight months, well above the Fed’s 2 percent target.
Charlie Bilello, CEO of Compound Capital Advisors, said on Twitter that he believes the true rate of inflation is being understated.
“Shelter is the single biggest component of CPI (33 percent of Index) and is being wildly understated (+4.1 percent) with rents up 17.8 percent over the last year (largest annual increase ever), and home prices up 19 percent (also largest annual increase ever). True inflation rate is much higher than 7 percent,” he wrote.
President Joe Biden addressed the Jan. 12 inflation numbers in a statement.
“Today’s report—which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling—demonstrates that we are making progress in slowing the rate of price increases,” Biden said.
“At the same time, this report underscores that we still have more work to do, with price increases still too high and squeezing family budgets,” he added.
In response to surging inflation and continued firming in the labor market, the Federal Reserve has moved to roll back emergency pandemic support measures and normalize monetary policy.
There’s now a 74.4 percent chance that the Fed will announce a 25-basis-point rate increase in March, according to the CME’s Fed Watch tracker.