On Wednesday, the Bureau of Labor Statistics reported that consumer prices are rising at a 7% clip as of December 2021 — the highest rate in roughly 40 years.
As CNBC summarized, prices for several key items rose significantly between December 2020 and December 2021:
- Gas — 49.6%
- Used vehicles — 37.3%
- Hotels — 27.6%
- Furniture and bedding — 13.8%
- Meat, poultry, and fish — 12.6%
- New vehicles — 11.8%
- Eggs — 11.1%
- Domestic services — 9.4%
- Stationery — 9%
- Jewelry — 8.8%
- Major appliances — 8.4%
- Margarine — 6.7%
- Electricity — 6.3%
- Apparel — 5.8%
According to more data from the Bureau of Labor Statistics, “real average hourly earnings” — which consider the effect of inflation — decreased by 2.4% last year. For an American earning $50,000 per year, inflation is therefore causing a $1,200 pay cut.
“In what was the best year for wage growth that we have seen in many, many years, it still comes up as a loss for many households,” Bankrate chief financial analyst Greg McBride commented to CNBC. “Their expenses increased even faster and chewed up all of the benefit of whatever pay raise they had seen.”
Despite skyrocketing prices, the Biden administration claims that it is “making progress” on rising inflation.
“Today’s report — which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling — demonstrates that we are making progress in slowing the rate of price increases,” President Joe Biden said in a statement released on Wednesday. “At the same time, this report underscores that we still have more work to do, with price increases still too high and squeezing family budgets.”
“Inflation is a global challenge, appearing in virtually every developed nation as it emerges from the pandemic economic slump,” Biden added. “America is fortunate that we have one of the fastest growing economies — thanks in part to the American Rescue Plan — which enables us to address price increases and maintain strong, sustainable economic growth. That is my goal and I am focused on reaching it every day.”
Americans, however, are not buying Biden’s argument. According to a Fox Business survey from December, 47% of Americans believe that President Joe Biden’s policies are “hurting” the economy, while only 22% believe they are “helping.” Likewise, 46% believe that Biden’s social spending agenda would “push inflation higher,” while 21% believe it would “help lower inflation.”
Other economic bottlenecks continue to plague the United States. For instance, groceries are experiencing a higher level of difficulty in keeping shelves stocked. According to Consumer Brands Association President and CEO Geoff Freeman, grocery stores currently have an unavailability rate around 15% — far higher than the typical 5% to 10% level.
The National Grocers Association also reported that grocery stores are grappling with labor shortages, noting that many of its members are operating with fewer than 50% of their typical workforce.
“While there is plenty of food in the supply chain, we anticipate consumers will continue to experience sporadic disruptions in certain product categories as we have seen over the past year and half due to the continued supply and labor challenges,” said Greg Ferrara, the organization’s president and CEO.