(TheRedAlertNews.com) – Surpassing January predictions, inflation surged to the highest level it’s been in forty years as consumer demand and pandemic-related supply chain issues spurred pricing gains.
Data released by the Labor Department shows the consumer price index rose by 7.5% in January from a year ago. This surge marks the fastest increase since February 1982, when inflation hit 7.6%.
Measuring a range of goods including gasoline, rents, groceries, and healthcare, the CPI jumped to 0.6% in the one-month period from December, which surpassed economists’ expectations that inflation would surge to 7.3% year on year, and 0.5% from the previous month.
Measurements of core prices, which excludes volatile goods like food and energy, surged by 6% in January from the same time in 2021, marking the steepest 12-month increase dating back to August 1982.
Seema Shah, chief strategist at Principal Global, an asset management firm with more than $500 billion under management, expressed concern that these numbers are unlikely to be the peak.
Shah continued her statements, saying, “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.”
The report also shocked the stock market as stocks declined sharply following the report, with tech stocks leading the market selloff.
Price increases were universal. Energy prices, although only rising 0.9% in January from December, year-on-year energy prices are up 27%. Gasoline is up 40% year-on-year. Food is up 7%, and shelter is up 4% year-over-year. The cost of used cars and trucks, which is the primary reason for the sharp increase in inflation, is up 40.5% over the year.
The CPI data signals more bad news for President Biden, as his approval ratings tumble with rising consumer prices. Republicans are pinning the blame on this inflation surge on Biden’s massive spending and gas and oil industry targeting energy policies. The White House disagrees, blaming supply-chain issues and pandemic-induced economic disruptions.
The reading, which is the eighth consecutive month that year-on-year inflation has been above 5%, will likely cause the Federal Reserve to start its interest rate increase with a half-basis point hike. Raising the interest rates forces consumers to cut back on spending as business and consumer loan rates increase.