The inflation rate in the United States shoots up in January to 7.5%, the highest since 1982 | Economy

Butcher section in a Washington supermarket, this Tuesday.
Butcher section in a Washington supermarket, this Tuesday.STEFANI REYNOLDS (AFP)

The year-on-year rate of inflation in the United States rose in January to 7.5% -half a point above that of December-, as reported on Thursday by the Bureau of Labor Statistics. The prices of food, housing and electricity are the main responsible for the inflationary pressure, the most pronounced since 1982. In monthly terms, prices rose six tenths in January. Core inflation, once the most volatile food and energy prices were eliminated from the calculation, increased by 0.6% in January and by 6% in the year.

Food prices increased by 0.9% in January, almost double that of December (0.5%). The cost of energy increased at the same pace last month, by 0.9%, with an increase in the cost of electricity partially offset by falls in the cost of gasoline and natural gas. The pressure is not unrelated to the global energy crisis and the uncertainty that the crisis in Ukraine implies for supply.

The core inflation rate registered the same rise as in December, 0.6%. That of January was the seventh time in the last 10 months that it has increased by at least half a point. Along with housing, furniture and services for the home, used cars and trucks, medical expenses and clothing were some of the products that registered the most increases, according to the government office.

The all-item index collectively rose 7.5% in the 12 months ending in January, the biggest one-year increase since the period ended February 1982. The increase in core inflation represents the biggest rise since August of 1982. Energy prices increased by 27% in the last year and food prices, by 7%, in interannual rate, although the cost of some products shot up even more: meat, chicken, fish and eggs registered an increase of 12.5% ​​during the year, while some beef cuts reached 23%.

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The injection of government stimuli to mitigate the impact of the pandemic, family savings and the rise in wages, which in 2021 increased at the fastest rate in two decades, have allowed Americans to weather the ever-increasing cost of the basket of the purchase. The sustained inflationary pressure adds pressure to the Federal Reserve (Fed, US central bank) to tighten its monetary policy, raising interest rates, frozen at around 0% since March 2020 to face the pandemic.

The good performance of the economy, with a vigorous recovery after the pandemic -GDP grew by 5.7 in 2021, the highest rate since 1984- and the situation close to full employment, with 4% unemployment in January despite the impact of the omicron variant, support the decision of the Federal Reserve (Fed) to advance the rise in the price of money, the main tool to cool inflation.

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“With inflation well above 2% and a strong labor market, the Committee [de Política Monetaria] expects that it will soon be appropriate to raise the target range for the federal funds rate,” the US central bank said on January 26, with March as the more than likely date to announce the first rate hike.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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