SOUTHERN TIER, N.Y. (WETM) – Consumer prices in the U.S. jumped 7% in December compared to a year earlier. That is the highest rate of inflation since 1982 as prices for groceries, rent, gasoline, and other necessities continue to rise.
The recovery from the pandemic throughout 2021 led to revved-up spending on goods such as food, furniture and appliances. Increased purchases put a huge damper on ports and warehouses, which resulted in supply shortages across the board. This caused businesses to raise prices to compensate for the shortage hike. Gas prices have also seen an uptick this past year as more Americans hit the roads following the pandemic recession.
“I think to an extent you’re going to see interest rates begin to rise in 2022,” human resources consultant Matthew Burr added. “I think they said .25% is what they’re looking at doing each quarter. I mean, again, it’s gonna cost more for groceries, it’s gonna cost more for heat and gas, your bills are going to rise which is potentially going to put a damper on what people can spend on other things.”
Consumer prices are also on the rise in part due to higher amounts of money floating around in the economy. According to economist Martin Cantor, the Federal Reserve printed $120 billion a month after the hardships faced during the pandemic and president Biden’s “American Rescue Plan” added over $1 trillion. This totaled to over $2.5 trillion floating in the economy.
“When you have too many free dollars chasing too few goods that drives up the price,” Martin said. “Add up the cost of home-heating fuel and the cost of gasoline. So you add all of that, you get too much money, not enough oil, and supply chain issues. That’s why we have inflation.”
As for reducing inflation rates back to normal levels, economists are hopeful that the economy can curb inflation in 12 to 18 months. This depends on how quickly the country can recover from the coronavirus and supply chain issues.