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business Wednesday 13 april 2022
EXPLAINER: Why U.S. inflation is so high, and when it may ease

By PAUL WISEMAN stayed home as a health
AP Economics Writer precaution, employers
WASHINGTON (AP) — An- slashed a breathtaking 22
other month, another four- million jobs. Economic out-
decade high for inflation. put plunged at a record-
For the 12 months that shattering 31% annual rate
ended in March, consumer in 2020's April-June quarter.
prices rocketed 8.5%. That Everyone braced for more
was the fastest year-over- misery. Companies cut in-
year jump since 1981, far vestment and postponed
surpassing February's mark restocking. A brutal reces-
of 7.9%, itself a 40-year high. sion ensued.
Even if you toss out food But instead of sinking into a
and energy prices — which prolonged downturn, the
are notoriously volatile and economy staged an unex-
have driven much of the pectedly rousing recovery,
price spike — so-called fueled by vast infusions of
core inflation jumped 6.5% government aid and emer-
in the past 12 months. That gency intervention by the
was also the sharpest such Fed, which slashed rates,
jump in four decades. among other things. By
Consumers have felt the spring of last year, the roll-
squeeze in everyday rou- out of vaccines had em-
tines. Gasoline is up an av- A customer prepares to pump gasoline into his car at a Sam's Club fuel island in Gulfport, Miss., boldened consumers to
erage of 48% in the past Feb. 19, 2022. return to restaurants, bars,
year. Airline tickets are up Associated Press shops, airports and enter-
24%, men's suits nearly 15%, tainment venues.
bacon 18%. increases accelerated — well into next year, with de- economy enough to rein in Suddenly, businesses had
The Federal Reserve never 2.6% in March, 4.2% in April, mand outstripping supplies inflation without weakening to scramble to meet de-
anticipated inflation this se- 5% in May, 5.4% in June. in numerous areas of the it so much as to trigger a re- mand. They couldn't hire
vere or persistent. Back in By October, the figure was economy. cession. The overall econo- fast enough to fill job open-
December 2020, the Fed's 6.2%, by November 6.8%, So the Fed has radical- my is healthy, with a robust ings or buy enough supplies
policymakers had fore- by December 7%. ly changed course. Last job market and extremely to meet customer orders.
cast that consumer infla- For months, Fed Chair Je- month, it raised its bench- low unemployment. But As business roared back,
tion would stay below their rome Powell and some oth- mark short-term rate by many economists say they ports and freight yards
2% annual target and end ers characterized higher a quarter-point and is ex- worry that the Fed's steady couldn't handle the traffic.
2021 at around 1.8%. consumer prices as merely pected to keep raising it, credit tightening will cause Global supply chains seized
Yet after having been "transitory" — the result, probably aggressively, well an economic downturn. up.
merely an afterthought mainly, of shipping delays into 2023. In doing so, the ____ With demand up and sup-
for decades, high inflation and temporary shortages Fed is moving decisively WHAT'S CAUSED THE SPIKE plies down, costs jumped.
reasserted itself last year of supplies and workers as away from the ultra-low IN INFLATION? And companies found that
with brutal speed. In Febru- the economy rebounded rates that helped revive the Good news — mostly. When they could pass along those
ary 2021, the government's from the pandemic reces- economy from the reces- the pandemic paralyzed higher costs in the form of
consumer price index was sion much faster than any- sion but also helped fuel the economy in the spring higher prices to consumers,
running just 1.7% above its one had anticipated. Now, surging consumer prices. of 2020 and lockdowns many of whom had man-
level a year earlier. From most economists expect in- The Fed is making a high- kicked in, businesses closed aged to pile up savings
there, the year-over-year flation to remain elevated risk bet that it can slow the or cut hours and consumers during the pandemic.q

Yelp to cover travel expenses for workers seeking abortions

The Associated Press "We've long been a strong closed plans to cover the
SAN FRANCISCO (AP) — advocate for equality in travel expenses of any of its
Yelp will cover the travel ex- the workplace, and be- more than 220,000 employ-
penses of employees who lieve that gender equal- ees, thousands of whom
must travel out of state for ity cannot be achieved if work in Texas, who travel to
abortions, joining the ranks women's healthcare rights another state for an abor-
of major employers trying are restricted," said Miriam tion.
to help workers affected Warren, Yelp's chief diver- The two largest U.S. ride-
by new restrictions in Texas sity officer. hailing services, Uber and
and other states. Other states, including Lyft, last year announced
The benefit announced Oklahoma, are also are they will pay the legal fees
Tuesday covers all 4,000 clamping down on abor- for drivers who could get
employees at the online tions prompting Yelp, sued under the new Texas
review service, but seems based in San Francisco, law for transporting a pas-
most likely to have its big- and several other com- senger to an appointment
gest immediate impact panies to draw up poli- for an abortion. This March 19, 2018, file photo shows the Yelp app on an iPad
on its 200 workers in Texas, cies aimed at helping their The policies expose com- in Baltimore.
which has passed a law workers get reproductive panies to potential back- Associated Press
banning abortions within health care in other states. lash from those who sup-
the state after six weeks of Last month Citigroup, port abortion restrictions, vantage for employers with as in an increasingly com-
pregnancy. based in New York, dis- but they could be an ad- a footprint in states like Tex- petitive job market.q