A key metric used to measure the rate of inflation is now showing the highest rate in 39 years.
As The Hill reports:
A measure of prices that is closely tracked by the Federal Reserve rose 5.8 percent last year, the sharpest increase since 1982, as brisk consumer spending collided with snarled supply chains to raise the costs of food, furniture, appliances and other goods.
The report Friday from the Commerce Department also said that consumer spending fell 0.6 percent in December. A wave of omicron cases discouraged many Americans from traveling, eating out or visiting theaters and other entertainment venues. At the same time, incomes rose 0.3 percent last month, providing fuel for future spending.
Stubbornly high inflation has hammered household budgets, wiped out last year’s healthy wage gains and posed a severe political challenge to President Joe Biden and Democrats in Congress. It also led the Federal Reserve to signal Wednesday that it plans to raise interest rates multiple times this year beginning in March to try to get accelerating prices under control.Chair Jerome Powell also made clear that the Fed will move to shrink its huge $8.9 trillion of bond holdings soon after it starts raising rates, another step that will likely tighten credit, slow spending and potentially weaken the economy.