US inflation hits highest level in 40 years

Inflation in the US climbed to its highest level in 40 years in January, with prices rising by 7.5% from a year ago

Inflation in the US climbed to its highest level in 40 years in January, with prices rising by 7.5% from a year ago, the Bureau of Labor Statistics reported on Thursday, Qazet.az reports citing The Wall Street Journal.

The rise in the consumer price index (CPI) survey – which measures the costs of a wide variety of goods – was the largest since February 1982. CPI rose 0.6% from December, higher than expected but still down significantly from last October when inflation rose 0.9% on a monthly basis.

Inflation in America has been driven higher by soaring demand and a lack of supply caused by Covid-19’s global impact on trade.

Price rises for food, electricity, and shelter were the largest contributors to the increase. The food index rose 0.9% in January following a 0.5% increase in December. The energy index also increased 0.9% over the month.

After stripping out food and fuel – whose prices are volatile – inflation still climbed 6% on an annual basis. A nationwide shortage of used cars also continued to drive the rise. Used cars prices were 40.5% higher in January compared to a year ago. Housing costs rose 4.4% from a year ago.

The Federal Reserve has signaled that it intends to raise interest rates at its meeting in March in an effort to dampen spending and bring down prices. In a note to investors, Oxford Economics argues the latest CPI news was likely to mean rate rises in the months ahead.