Inflation hit 7% in December, highest since 1982
Consumer prices rose faster in 2021 than they had in any 12-month period since 1982, according to December numbers released Wednesday that showed the inflationary surge continued at the end of the year.
- The Consumer Price Index rose 0.5% in December and 7% for the full year. Even excluding volatile energy and food, those numbers were 0.6% and 5.5%.
Why it matters: Higher prices for nearly everything consumers buy are sapping Americans' confidence and causing headaches for the Biden administration and the Federal Reserve.
By the numbers: December prices spikes were particularly notable for used cars and trucks (3.5%), apparel (1.7%), and food away from home (0.6%).
- There was some relief for consumers, by contrast, in falling prices for gasoline (-0.5%) and fuel oil (-2.4%).
The good news: Prices rose more slowly in December than earlier in 2021, with the 0.5% surge down from 0.8% in November and 0.9% in October.
The bad news: An 0.5% monthly inflation rate, if sustained for a full year, would work out to 6.2% annual inflation, still far above the 2% the Federal Reserve aims for.
What they're saying: "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 Biden said in a statement.
- "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," he added.
The bottom line: Inflation rates may be down from their 2021 peaks, but remain uncomfortably high, with deep implications for politics and for Americans' sense of well-being.
Editor's note: This article was updated with Biden's statement.