Inflation in the United States continued to rise, to 7 percent year-on-year in December. This is the highest level in 40 years, according to the US Department of Labor.
So, on average, the price of consumer goods has increased by 7 percent in a year. This is bad news for the Biden administration because it affects the purchasing power of many Americans. Higher inflation puts pressure on the central bank to intervene by raising interest rates. This is expected in March, which is helped by the economic recovery.
The annual inflation rate of 7 percent is in line with analysts’ expectations. Monthly inflation was 0.5 per cent, slightly higher than the expected 0.4 per cent.
Excluding high volatile food and energy prices, inflation stood at 5.5 per cent year-on-year and 0.6 per cent per month. That too was more than expected.
In December, housing and especially used vehicles became more expensive in the United States. Food prices continue to rise. Energy, the driver of inflation for about 2021, became slightly cheaper in the last month of the year.