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US Inflation has been moved higher by rising demand and lack of supply due to the Covid pandemic’s global impact on trade.
In January US inflation reached its highest level. Prices rose by 7.5% from a year ago as reported by the Bureau of Labor Statistics on Thursday.
The consumer price index (CPI) measures the costs of a wide variety of goods. The rise in the consumer price index (CPI) survey was the biggest since February 1982. CPI rose 0.6% from December which is much higher than expected. But it is still down significantly from last October when inflation rose 0.9% per month.
US inflation:
US Inflation has been increased by soaring demand. Another reason is a lack of supply due to Covid-19’s global impact on trade.
The largest contributors to the increase are Rosen’s prices for food, electricity, and shelter. The food index rose 0.5% in December and 0.9% increase in December. The energy index also rose 0.9% during the month.
After clearing out food and fuel – whose prices are elusive – inflation climbed 6%. A shortage of used cars also continued to move the rise. Used cars prices increased 40.5% higher in January as compared last year. Housing costs increased 4.4% from last year.
The Federal Reserve has warned that it plans to raise interest rates at its meeting in March. It is to decrease spending and lower prices. For investors, Oxford Economics asserts the latest CPI news was likely to mean rate rises in the upcoming months.
Source: The Guardian
The Fed sees its first concern as mastering inflation. These powerful price data increase the prospect of the Fed. It is starting its securing cycle with a 50bps rate hike in its March meeting. It is followed by increasing rate hikes at the succeeding meetings.
US Inflation has beaten up Joe Biden’s approval ratings as the jobs market has risen back from its pandemic fall. The US economy rose at 5.5% last year which is the largest growth rate since 1984. During the last three months, more than 1.6m new jobs have been added to the economy.
A poll was conducted by Press-NORC Center for Public Affairs Research. According to it, only 37% of Americans can handle the economy. As not only gas prices but food and housing prices are still rising.
Speaking in Virginia, Biden acknowledged the US inflation: He said that he knows food prices are going up. They are working to bring inflation down. He is going to work like the devil to lower gas prices.
On Wednesday The White House signaled the latest consumer prices snapshot could be high. Jen Psaki said that they expect yearly inflation reading in recent data. He also added that some are predicting above 7% and it would not surprise anybody.
Psaki said that they are looking at is recent trends and the inflationary increases are decreasing month to month.
Source : Ripples Nigeria
US stocks immediately fall on the news but managed to nail their way back. As the day progressed before being hit by Fed officials. James Bullard said that he wanted to see interest rates rise by one percentage point by the beginning of July.
Markets have been hit by speculation. The Fed’s plans for the monetary policy being made an about-turn till the end of the year. The US inflation would be temporary and it will subside as the global economy reopened.
All three main indexes in New York ended strongly lower with tech firms. These are receptive to increased rates among the worst hit. The Nasdaq fell more than two percent.
