Savannah Hulsey Pointer, FISM News
Inflation in the United States rose to its highest level in 40 years, when assessed by the Federal Reserve’s favored method of calculation. This negative change has caused growing pressure on the central bank to find a way to push back on price increases.
The Personal Consumptions Expenditures Price Index was updated on Friday by the Bureau of Economic Analysis and reported that prices rose 6.1% since last January. That’s an increase of three-tenths of a percentage point from the month before and the highest rate since 1982.
One of the major price increases was the cost of energy, which grew more than 25% over the course of the year, which was particularly harmful for commuters. Food prices also rose substantially and were up almost 7% on average over the course of the year.
“So-called core inflation, which strips out the relatively volatile categories of energy and food prices, rose three-tenths of a percentage point to 5.2% in January, the highest since 1983, showing that underlying inflationary pressures were strong,” the Washington Examiner reported.
“Spending is continuing at a solid pace even as consumers are facing ongoing gains in prices,” noted Rubeela Farooqi, chief U.S. economist for High Frequency Economics.
Some investors believe that the steep increase in inflation will cause the Fed to further increase its interest rate targets in the months ahead, which were set to zero during the pandemic. Several rate hikes are already expected throughout the year, starting in March.
Houston Chronicle columnist Chris Tomlinson weighed in on the issue, saying that while Americans are clearly worried about higher prices, the efforts to reduce inflation have led to a recession that likely has to get worse before it gets better:
“For years, I’ve explained why policymakers cannot craft a perfect economy through policy, but they can easily flush quality growth down the toilet. The Fed’s history of battling inflation should make Americans wonder if the cure could be worse than the disease,” Tomlinson said.
According to MSN, there are a few ways to insulate yourself from the growing prices that may be here to stay for a while. In addition to trimming discretionary spending on things such as entertainment and travel and buying generic products like prescriptions, not delaying major purchases could be a good move in the near future.
Some savings can also be found in areas like eliminating fees for credit cards or bank cards, or renegotiating bills like cable, streaming services, and cellphone services.