Inflation in the United States has hit its highest point in four decades as consumers feel the pinch and the purchasing power of American families has taken a nosedive.
Per Bloomberg, the Bureau of Labor Statistics reported last week that the consumer price index (CPI) jumped by 7% in 2021, marking the steepest 12-month rise in 39 years. Soaring prices for property, food, vehicles, and energy have all conspired to push up inflation at a higher rate than economists had predicted. However, even though prices have gone through the roof, they are still far removed from the historic highs of the 1980s.
Per The Independent, President Joe Biden has tried to reassure consumers about the rising prices. He stated, “Half of the price increases in this report are in cars and energy costs from November, since then, we have seen significant energy price reductions.” Biden has opted to combat rising fuel prices by tapping into the nation’s petroleum reserve, releasing 50 million barrels of oil.
Biden has come under fire from the Republicans for the surge in inflation. Chairwoman Ronna McDaniel said, “Wit skyrocketing prices at a 39-year-high, a supply chain crisis, trillions in reckless spending and tax hikes on families, Biden has lost the trust and confidence of the American people to get the economy working for them. Americans can thank Biden and the Democrats for the most expensive holiday season on record.”
A Wall Street Journal poll revealed that an overall majority of voters believe the Republicans are more capable of combating inflation than the Democrats. With a growing number of Americans blaming Biden’s administration policies for rising costs, the Republicans plan to make inflation a key point in the next election.
At a Senate Banking Committee meeting earlier this week, Fed Chair Jerome Powell said, “What we have now is a mismatch between demand and supply. We have a very strong demand in areas where supply is constrained, particularly around goods, particularly around things like cars.”
Per CNN, Managing Director of the International Monetary Fund, Kristalina Georgieva, stresses inflation will continue to define 2022, and we all need to adjust accordingly. She explained, “We have to recognize that inflation is a serious issue, economic and social, in many countries. Central banks like the Fed are right to take action. But they have to walk a thin path. They have to protect the economy while fighting inflation.”