WASHINGTON, D.C. – The economy continues to encounter significant roadblocks to recovery as inflation jumped 7.5 percent in January, reaching a 40-year high this week that is unfortunately serving to cancel out gains that Americans have made recently in terms of improved wages from their employers.
The inflation, experts say, is driven in-part by COVID-19 pandemic-related supply chain issues and a great deal of consumer demand, according to a new Labor Department report released Thursday. The 7.5 percent jump in inflation is the highest year-over-year increase since February 1982, when inflation hit 7.6 percent.
In addition, the report said, the Consumer Price Index (CPI) – a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, and medical care – increased 0.6 percent from December to January.
Core inflation – the change in the costs of goods and services that does not include the food and energy sectors – saw a 6 percent year-over-year increase is January, the highest jump since August 1982 said Seema Shah, chief strategist at Principal Global Investors.
“U.S. annual CPI is the highest since 1982, and what’s worse is that this likely isn’t the peak,” she said. “Higher-than-expected monthly gains in core CPI indicate continued underlying heat and will do nothing to relieve pressure on the Fed to tighten sharply and urgently.”
Despite wages of Americans rising slowly in recent months – average hourly earnings in January rose 0.1 percent – experts say that losses due to inflation reduced “real earnings” by 1.7 percent in January.
The inflation is hitting many areas that Americans consider essential spending; as of January year-over-year, energy prices are up 27 percent – with gasoline up 40 percent from where it was a year ago – shelter has increased 4 percent, and used car and truck prices have jumped 40.5 percent.
The steadily-increasing inflation rates have hit the approval ratings of President Joe Biden especially hard, with the sluggish economy listing being one of his most unpopular aspects in recent opinion polls.