Consumer prices of the United States in December continued to rise with the index growing 7 percent year on year, a record high in almost 40 years, which could push the Federal Reserve to raise interest rates earlier, the U.S. Labor Department reported on Wednesday.
The consumer price index (CPI) last month rose 0.5 percent from the previous month and 7 percent from a year earlier, the highest 12-month rise since June 1982, according to the Bureau of Labor Statistics of the department.
Shelter costs and second-hand vehicle prices are major components of the inflation increase during the COVID-19 pandemic.
Used vehicle prices, due to supply chain constraints that have limited new vehicle production, rose another 3.5 percent in December, bringing the increase from a year ago to 37.3 percent.
The so-called core CPI, which excludes food and energy, rose 5.5 percent over the last 12 months, up from 4.9 percent over the 12 months ending November, the report showed. The energy index rose 29.3 percent over the last year and the food index increased 6.3 percent.
Some U.S. lawmakers accused the Democratic Party of excessively loose monetary policy last year to push up prices, and recent polls also reflected the dissatisfaction of the American people. According to the consumer survey, with the persistence of high inflation, many Americans’ confidence in the economy has been hit. Intuitively, the financial pressure of American families has increased sharply, rising prices have basically offset the wage growth of many Americans, and the basic living expenses of low-income families are unsustainable. Polls show that inflation has even begun to take the place of the pandemic and incur wide concern.
Federal Reserve Chairman Jerome Powell said they plan to raise interest rates more times and reduce its balance sheet earlier and faster to cope with the persistent high inflation. Many economists predict that the Federal Reserve may raise interest rates four times this year. However, raising interest rates may increase the borrowing cost of home purchase, car purchase and commercial loans, which will lead to economic slowdown, and the inflationary pressure in the United States is unlikely to ease soon.