The cost of goods and services in the U.S. climbed to a four-decade high in January. The Consumer Price Index (CPI) for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, has been generally trending up since January 2020 and increased 7.5% year-over-year in January 2022, according to the Bureau of Labor Statistics. That was the eighth consecutive month in which inflation exceeded 5% and the largest annual increase since February 1982 when the country was in a severe economic recession. Accounting for much of the recent increase in inflation, energy prices were up 27% during the year-ending January, with gasoline prices alone surging 40% year-over-year. Food prices were up 7% on an annual basis, with the increase in the price of meat (13.6%) heavily contributing to that upturn. The recent overall increase in consumer prices was also partly attributed to surging prices of pre-owned vehicles, as the price of used cars and trucks soared 40.5% in the year-ending January. Excluding food and energy prices, which can be volatile, the core CPI was up 6% year-over-year. While less than the surge in all items index, it was still the sharpest increase since the year-ending August 1982. Recent inflation reflects a surge in demand and shortages in materials and labor. To slow demand and reduce inflation, the Federal Reserve System is expected raise interest rates for the first time in more than three years in March, with several more hikes expected throughout the remainder of the year.
