Americans are battling a congruent foe as the U.S. fights the strongest COVID-19 surge since the beginning of the pandemic through Omicron: inflation. According to the U.S. Labor Department’s Wednesday report, the consumer price index rose 7% in December 2021 over Dec. 2020. It’s the fastest-paced inflation increase in almost four decades, and gas prices were up 49.6% over the average price of Dec. 2020.
“Inflation at 7% is no joke,” Seema Shah, Principal Global Investors’ chief strategist, tells Fox News Wednesday. Shah cites Dec. 2021’s rates as the highest annual CPI number since 1982; a rate “driven not by energy prices, but by just about everything else.”
Shah says this could, however, mark the peak for annual inflation. If it does, then Americans should expect to see inflation decreasing through 2022. But only if supply chain strains ease. Unfortunately, this is unlikely as Omicron continues to strangle the global economy.
Inflation peaking at 7% may be why energy prices are down 1.1% into January. But this decrease offers little hope when energy prices are still up 29.3% over Dec. 2020. And with the average U.S. gas price sitting at $3.301 (via AAA Gas Prices, Jan. 12), consumers are feeling immense strain regardless.
President Biden on Inflation: ‘We still have more work to do, with price increases still too high and squeezing family budgets’
As inflation continues to rise, President Biden is feeling the effects, too. Biden’s approval rating is at an all-time low as Americans struggle to navigate a wildly expensive daily life.
Biden would release his own Wed. statement following the CPI data release, citing a 0.5% decline in month-over-month inflation; a trend that continues from Nov. 2021. To the President, this signals a “meaningful reduction in headline inflation.” His hope is that food and gas prices continue to decrease after this “peak.”
“At the same time, this report underscores that we still have more work to do, with price increases still too high and squeezing family budgets,” President Biden continues. “Inflation is a global challenge, appearing in virtually every developed nation as it emerges from the pandemic economic slump. America is fortunate that we have one of the fastest-growing economies.”
In turn, pressure is mounting on the Federal Reserve to combat record inflation. They may begin increasing interest rates before spring to combat price surges. This causes higher rates on consumer and business loans, thereby slowing the U.S. economy via spending cutbacks.
“The Federal Reserve will most likely raise interest rates earlier than anticipated to control inflation,” offers Dawit Kebede, the Credit Union National Association’s senior economist, Wednesday. “This is in addition to ending its support for the economy in the form of large asset purchases. This will raise the cost of borrowing for consumers and will reduce excess demand for goods.”