US inflation hits 39-year high of 7 per cent
- Consumer prices in 2021 rose by the most in nearly four decades, setting the stage for the start of Federal Reserve interest-rate hikes
- High inflation has proven more stubborn than the central bank predicted, as unprecedented demand for goods runs into supply constraints
US consumer prices soared last year by the most in nearly four decades, illustrating red-hot inflation that sets the stage for the start of Federal Reserve interest-rate hikes as soon as March.
The consumer price index climbed 7 per cent in 2021, the largest 12-month gain since June 1982, according to Labour Department data released on Wednesday. The widely followed inflation gauge rose 0.5 per cent from November, exceeding forecasts.
Excluding the volatile food and energy components, so-called core prices accelerated from a month earlier, rising by a larger-than-forecast 0.6 per cent. The measure jumped 5.5 per cent from a year earlier, the biggest advance since 1991.
The increase in the CPI was led by higher prices for shelter and used vehicles. Food costs also contributed. Energy prices, which were a key driver of inflation through most of 2021, fell last month.
The data bolster expectations that the Fed will begin raising interest rates in March, a sharp policy adjustment from the timeline projected just a few months ago.