Inflation in the U.S. hit 7% for 2021, the U.S. Bureau of Labor Statistics (BLS) reported this morning, while in the New York-Newark-Jersey City geographic area it was lower for the year at 4.4%.
Prices in the local area as measured by the Consumer Price Index for All Urban Consumers declined 0.2% in December compared with a national increase of 0.5%.
This reflected a 1.3% decline in the price of energy. Prices for shelter locally dropped 0.3% and recreation was down 1.5%. Food prices went up 0.3% in December while prices for new and used motor vehicles went up 1.7%.
For the year, energy prices in the local area jumped 21.8%, led by a 50.9% increase in the cost of gasoline.
The BLS said that the national 7% inflation rate for the 12 months ending in December was the largest 12-month increase since June 1982. All items except for food and energy rose 5.5%, the largest 12-month change since the period ending February 1991. The energy index rose 29.3% over the last year, and the food index increased 6.3%.
Federal Reserve Chairman Jerome Powell, in a confirmation hearing yesterday on his nomination to a second term as chairman, said that the Fed would have to increase interest rates to prevent inflation from becoming entrenched. Some economic observers expect the Fed to institute up to three interest rate hikes of about three-quarters of a point each during 2022 as a method for keeping inflation under control.
“Today the economy is expanding at its fastest pace in many years and the labor market is again strong,” Powell said. “As always, challenges remain. Both the individual shutdown and the subsequent reopening of the economy were without precedent.”
Powell continued, “The economy has rapidly regained strength despite the on-going pandemic giving rise to persistent supply and demand imbalances and bottlenecks and to elevated inflation. We know that high inflation exacts a toll particularly for those less able to meet the higher costs of essentials like food, housing and transportation. We are strongly committed to achieving our statutory goals of maximum employment and price stability.”
