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business Friday 11 February 2022
U.S. inflation highest in 40 years, with no letup in sight

By CHRISTOPHER RUGABER to raise its key rate in March
WASHINGTON (AP) — Infla- by one-half a percentage
tion soared over the past point, rather than its typical
year at its highest rate in quarter-point hike.
four decades, hammer- Over time, those higher
ing American consumers, rates will raise the costs for
wiping out pay raises and a wide range of borrowing,
reinforcing the Federal from mortgages and credit
Reserve's decision to be- cards to auto and busi-
gin raising borrowing rates ness loans. That could cool
across the economy. spending and inflation, but
The Labor Department said for the Fed, the risk is that in
Thursday that consumer steadily tightening credit,
prices jumped 7.5% last it could trigger another re-
month compared with a cession.
year earlier, the steepest Last week, the average
year-over-year increase rate on a 30-year fixed
since February 1982. The mortgage jumped to
acceleration of prices 3.69%, the highest level
ranged across the econo- in more than two years,
my, from food and furniture according to mortgage
to apartment rents, airline buyer Freddie Mac. Higher
fares and electricity. loan rates will elbow some
When measured from De- would-be home buyers out
cember to January, infla- A selection of beef cuts is displayed at a Publix Supermarket, Wednesday, Oct. 20, 2021, in Miami. of the market.
tion was 0.6%, the same as Associated Press Many large corporations, in
the previous month and conference calls with inves-
more than economists had remain in short supply as a able to afford food, gas, rather than every week or tors, have said they expect
expected. Prices rose 0.7% result. rent, child care and other two. supply shortages to persist
from October to November Prices for a broad range of necessities. More broadly, Even excluding volatile until at least the second
and 0.9% from September goods and services accel- inflation has emerged as food and energy prices, half of this year. Compa-
to October. erated from December to the biggest risk factor for so-called core inflation nies from Chipotle to Levi's
Shortages of supplies and January — and not just for the economy and as a jumped 0.6% from Decem- have also warned that they
workers, heavy doses of items directly affected by serious threat to President ber to January and 6% from will likely raise prices again
federal aid, ultra-low inter- the pandemic. Apartment Joe Biden and congressio- a year ago. this year, after having done
est rates and robust con- rental costs rose 0.5% in nal Democrats as midterm Stocks fell in morning trad- so in 2021.
sumer spending combined January, the fastest pace elections loom later this ing after the release of the Chipotle said it's increased
to send inflation leaping in in 20 years. Electricity pric- year. report, with the broad S&P menu prices 10% to offset
the past year. And there es surged 4.2% in January Among the Americans who 500 index down 0.6%. The the rising costs of beef and
are few signs that it will slow alone, the sharpest rise in are struggling with pricier yield on the 10-year bond transportation as well as
significantly anytime soon. 15 years, and are up 10.7% food and gas is Courtney jumped to nearly 2%, a sign higher employee wages.
Wages are rising at the from a year earlier. Last Luckey, who has changed that investors see more Fed And the restaurant chain
fastest pace in at least 20 month, household furniture her shopping habits and rate hikes ahead. said it will consider further
years, which can pressure and supplies rose 1.6%, the taken on additional work In the past year, sharp in- price increases if inflation
companies to raise prices largest one-month increase shifts at a grocery store in creases in the costs of gas, keeps rising.
to cover higher labor costs. on records dating to 1967. Charlotte, North Carolina, food, autos and furniture "We keep thinking that
Ports and warehouses are Food costs, driven by where she lives. have upended many other beef is going to level up
overwhelmed, with hun- pricier eggs, cereal and Luckey, 33, used to be able Americans' budgets, too. and then go down, and it
dreds of workers at the dairy products, increased to fill up a grocery cart for In December, economists just hasn't happened yet,"
ports of Los Angeles and 0.9% in January. Air fares $100. Now, she said, $100 at the University of Pennsyl- said John Hartung, the
Long Beach, the nation's rose 2.3%. New car prices, barely fills half the cart. vania's Wharton School es- company's chief financial
busiest, out sick last month. which have jumped dur- Tomatoes have reached timated that the average officer.
Many products and parts ing the pandemic because nearly $5 a pound, "which household had to spend Executives at Chipotle, as
of a shortage of computer I think is ridiculous." Luckey $3,500 more than in 2020 to well as at Starbucks and
ARUBA chips, were unchanged has switched to canned to- buy an identical basket of some other consumer-fac-

ing companies, have said
goods and services.
last month but are up 12.2% matoes and has begun us-
their customers so far don't
Thursday's report will inten-
from a year ago. The surge ing coupons for Family Dol-
CLEAN in new-car prices has, in lar and Food Lion. sify pressure on the Fed and seem fazed by the higher
turn, accelerated used- To help pay bills, she's also its chair, Jerome Powell, to prices.
car prices; they rose 1.5% in picked up more hours at a tighten credit to try to slow Levi Strauss & Co. raised
January and are up a diz- Harris Teeter grocery store. the economy enough to prices last year by roughly
zying 41% from a year ago. But the store is 30 minutes cool inflation. Powell sig- 7% above 2019 levels be-
"Just as price pressures in from her house, so she's naled two weeks ago that cause of rising costs, includ-
some areas ease, inflation had to spend more on gas. the central bank would like- ing labor, and plans to do
in other parts of the econ- All her forced additional ly raise its benchmark short- so again this year. Even so,
omy" is picking up, said spending has caused Luck- term rate multiple times the San Francisco-based
Sarah House, an economist ey to pull back on the fam- this year, with the first hike company has upgraded its
at Wells Fargo. "The upshot ily activities, such as bowl- almost surely coming at its sales forecasts for 2022.
is that inflation is likely to re- ing, with her daughter, her next meeting in March. "Right now, every sig-
IS MORE main uncomfortably high." brother and his two sons. With the latest inflation nal we're seeing is posi-
DUSHI The steady rise in prices has Those outings now typical- data, some economists ex- tive," CEO Chip Bergh told

left many Americans less ly happen once a month, pect the Fed may decide analysts.q