US inflation at its highest since June 1982
It goes up, over and over again. Inflation continued to rise in the United States in December. The consumer price index rose 0.5% over one month, and 7% over the last twelve months, while in November, they had registered an increase of 6.8%. Such a figure, in line with expectations, had not been observed since June 1982. Further measured, that is to say restated for volatile elements such as energy and food prices, inflation has reached 5.5% year on year last month, the highest level since February 1991. ” It will continue to climb to reach 6% in the coming months, says Paul Ashworth, chief US economist at Capital Economics. Latest media reports on empty grocery store shelves in the northeastern United States caused by staff absenteeism due to the Omicron wave and disruption from winter storms indicate further upward pressure on food prices. The lack of personnel also explains the increase in air fares (+ 2.7% over one month). As regards the prices of vehicles, whether new or used, they too have increased by 3.5% over one month for the former and by 1% for the latter. Although semiconductor shortages are less severe and production picks up, pricing pressures may remain strong for some time before easing.
These figures will inevitably influence the US Federal Reserve (Fed) in terms of monetary policy, even if it is not its preferred indicator. The monetary institution refers to the PCE index of personal consumption expenditure shown in the household income and expenditure statistics. During his confirmation hearing before a Senate committee yesterday, Jerome Powell, chairman of the Fed, said the US economy is strong enough to withstand rate hikes, and that monetary tightening is needed to contain the rate. ‘inflation and avoid not to settle down. The Fed will engage in a policy ” closer to normal, but it’s a long road to normal considering where we are at (…) and this policy should not have a negative effect on employment “, did he declare. Three rate hikes, or even four, are expected this year.