Consumer prices in America have skyrocketed to the highest rate in 40 years as inflation explodes under Democrat President Joe Biden’s economy.
As the new year started, U.S. consumer prices jumped by the most in nearly four decades, new figures published by the Department of Labor (DOL) on Thursday reveal.
The spike saps the savings of American families, diminishes the purchasing power of worker paychecks, and ramps up pressure on the Federal Reserve to hike interest rates beginning in March.
The DOL said the consumer price index climbed 0.6 percent from a month before.
Consumer prices are up by a staggering 7.5 percent, compared with January of last year.
The numbers are far beyond what was predicted.
Economists had expected prices to rise 0.4 percent on a monthly basis and 7.2 percent above a year ago’s prices.
In December, consumer prices rose 0.6 percent compared with November.
For the full year, prices were up by seven percent in 2021, the worst annual inflation since 1982.
Excluding the volatile food and energy components, so-called core prices rose by 0.6 percent.
The measure soared six percent from a year earlier. Both exceeded economist estimates.
Although many economists and anti-Trump journalists claimed President Donald Trump’s tariffs would raise prices, consumer prices remained low throughout his administration.
As it turned out, Trump’s tariffs were not taxes on consumers.
Instead, they were absorbed by Chinese producers and exporters and the profit margins of most large U.S. companies.
Inflation only began to accelerate last March after years of coming in below the Fed’s two percent target.
The Fed had decided to keep interest rates low although the economy was recovering at a faster than expected rate.
What’s more, the Biden administration pushed through billions of dollars of deficit spending in the American Rescue Plan.
These combined to fuel demand for goods and services faster than supplies could expand, pushing up prices.
Federal Reserve chief Jerome Powell, following the advice of many of the economists on the central bank’s staff, initially claimed that inflation was due to transitory factors.
Fed officials forecast that inflation would fall in the latter half of 2021, predicting that supply chains would swiftly unsnarl and a rebalancing of consumer demand from goods to services would relieve pricing pressure.
The Biden administration, under the tutelage of former Fed chair and now Treasury Secretary Janet Yellen, largely followed suit and continued to press for even more spending.
Establishment media largely parrotted these views, portraying the surge in inflation as a temporary shift higher due to the reopening of the economy.
Many establishment outlets described fears of longer-lasting inflation as the product of partisan fear-monger and claimed they had no rational basis.
Some of the same outlets that had claimed, without evidence, that Trump’s tariffs were raising prices now insisted price increases under Biden were no big deal.
Some said that a silver lining of inflation would be higher wages.
In fact, prices have been rising faster than wages, lowering the standard of living for many American families, and the hardest hit has been lower-income Americans.
That unanimity in government and establishment media proved calamitous.
Inflation continued to soar, sapping the credibility of the Biden administration and the central bank when it came to inflation.
Polls show the public’s rating of Biden’s handling of the economy is at a record low.
Biden’s overall approval rating has plummeted.
Forty-five percent of Americans say inflation has put a strain on household finances.
The Federal Reserve is expected to raise its target interest rate in March, months earlier than market watchers thought last year.
Many analysts increasingly think the Fed will hike five to seven times this year as inflation proves less tractable than officials believed.
