(FreedomBeacon.com)- Inflation rates have hit all-time highs recently.
This week, the U.S. Department of Labor announced that inflation has increased over the last 12 months at the fastest pace it has in the last 40 years.
One of the major gauges of inflation, the consumer price index, increased a stunning 0.5% over the last month. The year ended with a 7% increase in the CPI for 2021. That’s the largest one-year increase in the index since way back in June of 1982, when inflation increased 7.1%.
Other similar inflation measures are increasing as well. Core CPI, which excludes energy and food costs that can exaggerate inflation rates, increased 0.6% for December, after increasing 0.5% in November. That marked the sixth month out of the last nine in which the index increased 0.5% at least.
Some of the biggest sectors that contributed to the rise in prices are the sale of used trucks and cars as well as the housing market.
If there was one positive sign from the recent report, it’s that the energy index in December decreased by 0.4%. This could help Americans who have long been suffering at the pump.
Many people in the country are beginning to think that rising prices are here to stay for a while, and that they won’t just be a temporary spike.
The Federal Reserve typically would have the ability to increase interest rates to help slow inflation, but Chair Jerome Powell said this week that the Fed is restricted in this power by the current “era of persistently low interest rates.”
Powell told the Senate Committee on Banking, Housing and Urban Affairs earlier this week that the economy has rebounded quite well from the pandemic, but it may have done so a little too fast. The other moving parts in the economy have yet to catch up.
He specifically mentioned problems with the supply chain, which have been struggling to meet the demand across various consumer sectors. As a result, there have been significant shortages in inventory for stores — resulting in empty shelves — and major delays in shipping.
As he explained:
“The economy has rapidly gained strength despite the ongoing pandemic, giving rise to persistent supply and demand imbalances and bottlenecks, and thus 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.”
Powell has been indicating for the last few months that inflation is probably not going to be a short-term, temporary situation for the United States. Back in November, he told the Senate Banking Committee as much when he testified:
“I think the word ‘transitory’ has different meanings to different people. To many, it carries a sense of short-lived. We tend to use it to mean that it won’t leave a permanent mark in the former of higher inflation. I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”