Consumer prices rose 7.5 percent annually by the end of January, according to data released Thursday by the Labor Department, the fastest rate since February 1982. Consumer prices also rose 0.6 percent in January, the same rate as in December, after falling for three consecutive months.
Price hikes for food, electricity, and shelter contributed the most to January’s inflation jump, the Bureau of Labor Statistics said Thursday. Food prices rose 0.9 percent in January, nearly twice December’s gain of 0.5 percent, and energy prices also rose 0.9 percent as higher electricity rates offset declines in gasoline and natural gas prices.
Food prices are 7 percent higher, gas prices are 40 percent higher, and energy prices in general are 27 percent higher than in January 2021, according to the Labor Department.
The Fed has also laid the groundwork to raise interest rates several times this year as inflation rises well above their annual average target of 2 percent. The bank all but formally confirmed it would raise interest rates in March from the current baseline, which was set near zero due to the ongoing pandemic.
Most Republican lawmakers and an array of economists had urged the Fed to begin hiking interest rates last year, though Fed officials resisted over concerns it would limit the return of workers to the labor force. The Fed, however, pivoted sharply in December as inflation continued to spike and pose potential threats to future job gains.