NATIONAL NEWS

US consumer prices soared 7% in past year, most since 1982

Jan 12, 2022, 7:25 AM | Updated: Jun 13, 2022, 3:42 pm
FILE: Shoppers visit the Dolphin Mall on December 21, 2021 in Miami, Florida. Shoppers are seeing h...
FILE: Shoppers visit the Dolphin Mall on December 21, 2021 in Miami, Florida. Shoppers are seeing higher prices on many goods as the annual inflation rate in the US accelerated to 6.8% in November of 2021, the highest since June of 1982. (Photo by Joe Raedle/Getty Images)
(Photo by Joe Raedle/Getty Images)

WASHINGTON (AP) — Prices paid by U.S. consumers jumped 7% in December from a year earlier, the highest inflation rate since 1982 and the latest evidence that rising costs for food, rent and other necessities are heightening the financial pressures on America’s households.

Inflation did slow slightly on a month-to-month basis: The Labor Department’s report Wednesday showed that consumer prices rose 0.5% from November to December, down from increases of 0.8% and 0.9% in the previous two months.

Inflation has spiked during the recovery from the pandemic recession as Americans have ramped up spending on goods such as cars, furniture and appliances. Those increased purchases have clogged ports and warehouses and exacerbated supply shortages of semiconductors and other parts. Gas prices, while declining a bit from November to December, have surged in the past year, in part because Americans have driven more in recent months after having cut back on travel and commuting earlier in the pandemic.

In its report, the government said that excluding volatile food and gas prices, so-called core prices surged 0.6% from November to December, slightly more than the 0.5% increase from October to November. Measured year over year, core prices jumped 5.5% in December, the fastest such increase since 1991.

Rising prices have wiped out the healthy pay increases that many Americans have been receiving, making it harder for households, especially lower-income families, to afford basic expenses. Polls show that inflation has started displacing even the coronavirus as a public concern, making clear the political threat it poses to President Joe Biden and congressional Democrats.

A significant portion of consumer inflation is still being driven by pandemic-driven mismatches between demand and supply. Used car costs rose 3.5% from November to December and have soared more than 37% compared with a year ago. With new car production restrained by shortages of semiconductors, consumers have snapped up used cars, forcing up their costs.

On Tuesday, Chair Jerome Powell told Congress that the Federal Reserve is prepared to accelerate the interest rate hikes it plans to begin this year if it deems it necessary to curb high inflation. Fed officials have estimated that they will raise their benchmark short-term rate, now pegged near zero, three times this year. Many economists envision as many as four Fed rate hikes in 2022.

Those rate increases would likely increase borrowing costs for home and auto purchases as well as for business loans, potentially slowing the economy. The rate hikes also mark a sharp reversal in policy by Fed policymakers, who as recently as September had been split over whether to raise rates even once this year. The Fed is also rapidly ending its monthly bond purchases, which were intended to lower longer-term interest rates to encourage borrowing and spending.

Yet the Fed’s quick pivot hasn’t quelled questions from many former Fed officials, economists and some senators about whether the Fed has acted too slowly to end its ultra-low-interest rate policies in the face of accelerating inflation — and put the economy at risk as a result.

In his testimony to Congress on Tuesday, Powell said the Fed mistakenly believed that supply chain bottlenecks that have helped drive up the prices of goods wouldn’t last nearly as long as they have. Once the supply chains were unsnarled, he said, prices would come back down.

Yet for now, the supply problems have persisted, and though there are signs that they are loosening in some industries, Powell acknowledged that progress has been limited. He noted that many cargo ships remain docked outside the port of Los Angeles and Long Beach, the nation’s largest, waiting to unload.

With the Biden administration facing public discontent over the rise in inflation, President Joe Biden has said his administration’s investments in ports, roads, bridges and other infrastructure would help ease inflation by loosening some snarled supply chains.

In the meantime, many restaurants have been passing some of their higher labor and food costs on to their customers in the form of higher prices. So far, many consumers seem willing to pay more. Gene Lee, CEO of Darden Restaurants, which owns Olive Garden and other brands, told investors recently that this is “the toughest inflationary environment we’ve seen in years.”

The company said its food and beverage costs jumped 9% during the quarter, and its hourly wage costs rose nearly 9% as it raised pay to attract workers. Darden said it raised its prices, in turn, by 2% during the quarter and expects to raise them by 4% over the next two quarters to help compensate. Rick Cardenas, the company’s president and chief operating officer, said those higher prices have yet to reduce consumer demand.

KSL 5 TV Live

Top Stories

National News

FILE: A Frontier airlines plane lands at the Miami International Airport on June 16, 2021 in Miami,...
Zoe Sottile

Frontier Airlines announces new unlimited summer flight pass

Frontier Airlines has announced its newest incentive to get travelers back in the air post-pandemic: An unlimited summer flight pass that costs $399.
21 hours ago
Born on May 11, 1992, Bobi is 30 years and 268 days old. (Guinness World Records)...
Amarachi Orie

Meet, Bobi. The new official world’s oldest living dog

Sorry, Spike. There's a new world's oldest living dog, and he's the oldest ever recorded
21 hours ago
Flames erupt after a train derailment in East Palestine, Ohio, on February 3. (Courtesy Kevin Csern...
Rebekah Riess and Hannah Sarisohn

Train derailment in northeastern Ohio sparks massive fire

A train derailment and resulting large fire have prompted an evacuation order in an Ohio village near the Pennsylvania state line.
21 hours ago
In this photo provided by Brian Branch, a large balloon drifts above the Kingstown, N.C. area, with...
Zachary Cohen

US military has shot down the Chinese spy balloon off US East Coast, US official says

The US military has shot down the suspected Chinese surveillance balloon over the Atlantic Ocean off the Eastern Seaboard of the United States, a US official said Saturday.
21 hours ago
A graphic image of a plane-like spacecraft...
Ashley Strickland

Cosmic seaplanes and self-growing bricks could help us explore other worlds

What are the emerging technologies that could provide new ways of studying the universe?
21 hours ago
A man works at an avocado orchard in Santa Ana Zirosto, Michoacan state, Mexico, Thursday, Jan. 26,...
Associated Press

Route to Super Bowl is long, dangerous for Mexican avocados

It is a long and sometimes dangerous journey for avocados destined for guacamole on tables and tailgates in the United States during the Super Bowl.
21 hours ago

Sponsored Articles

vintage photo of lighting showroom featuring chandeliers, lamps, wall lights and mirrors...
Lighting Design

History of Lighting Design | Over 25 Years of Providing Utah With the Latest Trends and Styles

Read about the history of Lighting Design, a family-owned and operated business that paved the way for the lighting industry in Utah.
Fiber Optical cables connected to an optic ports and Network cables connected to ethernet ports...
Brian Huston, CE and Anthony Perkins, BICSI

Why Every Business Needs a Structured Cabling System

A structured cabling system benefits businesses by giving you faster processing speeds and making your network more efficient and reliable.
notebook with password notes highlighted...
PC Laptops

How to Create Strong Passwords You Can Actually Remember

Learn how you can create strong passwords that are actually easy to remember! In a short time you can create new ones in seconds.
house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 Reasons You May Want to Consider Apartment Life Over Owning a Home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to Choose What MBA Program is Right for You: Take this Quiz Before You Apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
US consumer prices soared 7% in past year, most since 1982