According to the Bureau of Labor Statistics, the consumer price index, which measures costs across many different goods and services, increased 7% over the last 12 months and 0.5% monthly. This was the fastest increase in inflation since June 1982.
The government infused money into the economy and the Fed slashed interest rates to combat economic challenges brought by the covid pandemic. As this led to increased cash for many Americans and the corresponding desire to spend, now supply chains have been strained by shortages in both workers and goods. All this has contributed to the spike in prices for cars, gas, food and furniture. Initially, these price increases were termed “transitory” by Fed Chair Jerome Powell and others but now, many economists expect consumer inflation to remain elevated at least through this year, with demand outstripping supplies in numerous areas of the economy. The Fed is planning to increase interest rates three times this year in an effort to stem inflation. The hope is that price increases slow down as supply chains open up and issues specific to the pandemic work themselves out, but inflation is generally expected to remain high through 2022.