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US inflation soars to 7%, the highest in 40 years

According to the Consumer Price Index (CPI) News Release published by the U.S. Bureau of Statistics on Wednesday, Jan. 12, the CPI “rose 7.0% for the 12 months ending December, the largest 12-month increase since the period ending June 1982.”

This trend was largely anticipated by many. However, while the Biden administration blames the COVID-19 pandemic for the inflation surge, Republicans argue that massive government spending is to blame, as VOA News reported.

The CIP measures the average change in prices over time that consumers pay for a variety of goods and services.

Items related to energy commodities and services were the most affected. As officially reported, “The energy index rose 29.3% over the past 12 months with all major energy component indexes increasing. The gasoline index rose 49.6% over the last year. The index for natural gas rose 24.1% over the last 12 months, and the electricity index rose 6.3%”.

Over the last year, the food index rose 6.5%, “By far the largest increase was that of the index for meats, poultry, fish, and eggs, which rose 12.5% over the year despite falling in December. On the other hand, the dairy and related products index increased 1.6%, the smallest increase among the groups.”

12-month percentage change, Consumer Price Index, selected categories (US Bureau of Labour Statistics/Screenshot)

Inflation has added more difficulties for workers amid a surge in COVID cases. Also, it threatens Biden’s “Build Back Better” initiative. The present administration expects to count on a $1.7 trillion spending package that Congress passed, but stills need to be approved by the Senate.

Biden admitted that “we still have more work to do, with price increases still too high and squeezing family budgets” and that “Inflation is a global challenge, appearing in virtually every developed nation as it emerges from the pandemic economic slump.”

Economists believe that the United States will not recover so fast this time, as the country is still fighting a new wave of COVID cases. However, as reported by Newsmax, David Kelly, the Chief global strategist at JPMorgan Funds in New York, said, “The first quarter should see inflation peaking, with lower energy prices and a decline in food and auto inflation allowing for a slower increase in prices for the rest of the year.”

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