U.S. Inflation: Where Price Increases Are Impacting American Households Most

by TK Sanders

The consumer price index rose a staggering 7.5 percent in January year over year, marking the single highest percentage rise since February of 1982. The price of nearly everything in the market has inflated, and because of the nature of fiat currency, it will never ease back to prior pricing. Once the money has been printed, and the genie is out of the bottle, the value of products goes up and the value of your cash goes down.

And there’s absolutely nothing you can do about it besides try to make more money. That’s why the most honest economists call inflation a “hidden tax” passed along by the government. Lawmakers on both sides of the aisle smile as they pass along the tax to you, the consumer, all the while touting the great advancements in society that their tenure in Washington achieved — at your expense, of course. You don’t get to write off inflation come tax time, and you can’t avoid it. Thus, it’s a tax, and the tax man means business in 2022.

What is inflation, and where does it come from?

The consumer price index (CPI) measures basic pricing for sectors like energy, food, rents, and automobiles. It means to track the price history of American goods, thus explaining why a hot dog costs $8 instead of a nickel, now. Or, more applicably, why your coffee costs $5.50 instead of $5 just a year ago. The goods, themselves, didn’t change in terms of value over the years; but the prices continue to rise. And now, prices are rising so steeply that the results are breaking records.

As a result, folks are flooding the investment markets with cash that they don’t have, which drives up the prices artificially and tips consumer debt to all-time highs. Why? Because the only way to combat inflation is to add more cash to the jar via investments.

The treadmill-like nature of fiat currency always, always, produces a boom-and-bust cycle as a result. Recessions are literally baked into the cake. The only question is how far do we as an economy push the limits of the rubber band before it snaps back and pops our hand? According to some economists, the record-high inflation of January may not even be the peak.

“U.S. annual CPI is the highest since 1982. And what’s worse is that this likely isn’t the peak,” said Seema Shah, chief strategist at Principal Global Investors. “Higher-than-expected monthly gains in core CPI indicate continued underlying heat. It will do nothing to relieve pressure on the Fed to tighten sharply and urgently.”

So who is to blame for inflation? Any government that elects to print money and distribute it to banks via call windows rather than letting the market work itself out naturally. In other words, not one Democrat or one Republican, but every government with a Federal Reserve. Currently, Republicans blame Biden’s massive spending agenda and attack of energy for the inflation — all of which is true. Democrats blame record inflation on the COVID pandemic spending, propagated first by Republican President Donald Trump — this is also true. They all have their fingers on the trigger; none of that “free” relief money was ever free. And as a result, your “hidden” taxes are going up this year.

Which economic sectors are seeing sharpest spikes?

Energy prices rose 0.9 percent in January from the previous month, with an increase in electricity offsetting monthly decreases in gasoline and natural gas. The Labor Department reported that gasoline prices have jumped 40 percent over the past year; while natural gas has surged 22.6 percent and electricity is up 10.7 percent. In all, energy prices have climbed more than 27 percent over the course of the past 12 months.

Food prices rose 0.9 percent in January, surging after smaller increases in December and November. Meats were hit with the hardest bumps: beef and veal (16 percent), pork (14.1 percent), chicken (10.3 percent), ham (10 percent), and fish and seafood (12.7 percent).

Used car prices, a key component of any inflationary surge, increased again last month. They jumped 1.5 percent from the previous month and 40.5 percent year over year. The cost of new cars, meanwhile, rose 0.6 percent in December from the previous month and 12.2 percent from the prior year, largely due to semiconductor shortages.

Lastly, rent costs increased 0.4 percent in January and 4.4 percent over the past 12 months. Higher housing costs most directly and acutely affect household budgets, all of which include shelter.