U.S. Inflation Spiked 7% In Past Year, Most Since 1982

Biden’s economy sees inflation jump at its fastest pace in nearly 40 years, up 7% from a year earlier.

QUICK FACTS:
  • U.S. household expenses are rising, eating into wage gains and heaping pressure on Joe Biden’s administration, according to The Associated Press (AP).
  • Prices have risen sharply for cars, gas, food, and furniture, AP reports, as some Americans have ramped up spending amid shortages of workers and raw materials that have squeezed supply chains.
  • For example, used car prices have jumped more than 37% over the past year since new car production has been restrained due to semiconductor shortages.
  • Shortages and higher prices at U.S. grocery stores have also grown in recent weeks as new problems, like the omicron variant and severe weather, have compounded supply-chain problems, notes AP.
  • Rising prices have cut out healthy pay increases that many Americans have been receiving, making it harder for households to afford basic expenses, especially lower-income families.
Screenshot from AP taken January 12, 2022
ANOTHER RECORD-BREAKER:
  • The Labor Department reported Wednesday that excluding volatile food and gas prices, so-called core prices surged 0.6% from November to December, reports AP.
  • Measured year over year, core prices jumped 5.5% in December, the fastest such increase since 1991.
COST PASSED ON TO CUSTOMERS:
  • Restaurants are passing along higher labor and food costs onto their customers.
  • Darden Restaurants (which owns Olive Garden), LongHorn Steakhouse, and other chains, said they increased their prices by 2% at the end of last year.
  • Darden CEO Gene Lee told investors recently that this is “the toughest inflationary environment we’ve seen in years.”
  • These restaurants expect to bump up prices even more, by another 4% over the next six months.
BACKGROUND:
  • AP notes how polls show that inflation has started displacing even the coronavirus as a public concern, making clear the political threat it poses to Biden and congressional Democrats.
  • Many cargo ships are still docked outside the port of Los Angeles and Long Beach, waiting to unload.