Inflation has risen at its fastest pace in nearly 40 years last month, up 7 percent from a year earlier, reports AP News. As a result, household expenses have gone up, which is eating into wage gains and putting pressure on President Biden and the Federal Reserve to address what is a growing threat to the economy.
It has been no secret that prices have been rising sharply for cars, gas, food, and furniture during a rapid recovery from the pandemic recession. Despite there being shortages of workers and raw materials that have been squeezing supply chains, Americans have ramped up spending during this time. On Wednesday, the Labor Department reported that excluding volatile food and gas prices, core prices surged 0.6% from November to December. Measured year over year, core prices rose 5.5% in December, the fastest such increase since 1991, AP News reports. A significant portion of inflation is being caused by the pandemic-driven mismatches between demand and supply.
These rising prices also have wiped out whatever healthy pay increases many Americans have been receiving, in turn making it harder for households, particularly lower-income families, to afford basic expenses. AP News says that polls show inflation has started displacing even the coronavirus as a public concern, making it clear that this poses a real political threat to President Biden and congressional Democrats. This also makes clear how much of a problem this is becoming for Americans across the country.