US inflation reaches highest level in four decades as consumer prices jump 7 pc in 2021

US inflation reaches the highest level in four decades as consumer prices jump 7 per cent in 2021 as the consumer price index jumped 7 per cent last year, the fastest pace since 1981.

Inflation hit a fresh 39-year high in December as a drop in energy costs wasn't enough to offset a steady march upward for staples such as food, rent, and cars amid stubborn supply-chain bottlenecks and worker shortage, according to USA Today.

Wells Fargo economist Sam Bullard said that COVID-19's fast-spreading omicron variant likely intensified the price increases by spawning more worker absences in global delivery networks and slowing shipments.

"That more than erased any easing of demand and prices in COVID-19-sensitive industries like travel," he said.

Further, Economists expect overall inflation to ease in the coming months as gasoline and other energy prices continue to pull back and crude oil prices fall. But core inflation is expected to drift higher before edging down as the supply snags are ironed out.

Earlier, consumers who were already snapping up goods such as TVs and appliances while stuck at home during the health crisis began dining out and traveling more. Many were ready to splurge after they built up more than USD 2.5 trillion in additional savings from federal stimulus checks and enhanced unemployment benefits, as well as cutting back during the lockdowns.

At his confirmation hearing for a second term Wednesday, Federal Reserve Chair Jerome Powell told US lawmakers the central bank is prepared to raise interest rates more rapidly than planned to contain inflation. The Fed already has accelerated the phaseout of its bond-buying stimulus, a move that would clear the way for interest rate hikes as early as March, as noted by USA Today.

( With inputs from ANI )

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