Inflation is a fact of life in the United States today, yet the pace of inflation varies greatly across the country. Various consumer preferences and demand levels, COVID-inspired migrations from urban to suburban areaswhich drives up demand in some regions while lowering demand in othersand transportation costs determined by geography and distance from suppliers all contribute to regional variation in inflation.
Figure 1 shows the average monthly cost of inflation by location to show how rising costs are affecting Americans today. Monthly inflation rates, each relative to January 2021, are multiplied by average monthly household spending, which varies by area, to determine the extra monthly cost to households. The result indicates how much rising prices would raise monthly family costs in 2021.
As inflation rises, so does the monthly cost to American familiesadded expenditures that will continue to be borne by Americans in the future, regardless of whether inflation returns to normal levels now that price levels have migrated upward permanently.
Figure 1: Average Monthly Inflation Costs per Household by Census Division, January 2021
Calculations by the JEC. Consumer Price Indices (CPI) are obtained for each of the nine Census divisions for each month of 2021, and the percent change in CPI from January 2021 is applied to average monthly household expenditure data across the four Census regions. The average monthly household spending of households in different divisions within the same region is considered to be the same. Because the statistics on household spending is based on a two-year average from 2019 to 2020, this research is likely to underestimate total spending in 2021 as well as the monthly cost of inflation per Census division. The Bureau of Labor Statistics provides both CPI and consumer spending data.
Last year, the average household inflation cost increased from over $100 in April 2021, when the annual inflation rate first began to accelerate, to almost $380 in January 2022, when it reached 7.5 percent. Utah, Colorado, Arizona, New Mexico, Montana, Idaho, and Wyoming have the highest inflation rates in the country, with over $500 in additional family prices in January. The East South Central region, which includes Kentucky, Tennessee, Mississippi, and Alabama, has the lowest monthly inflation prices due to lower inflation rates and average spending levels. As of January 2022, monthly inflation costs for households in the remaining regions range from $350 to $400.
The following interactive map breaks down yearly inflation rates in January 2022 by region to give you a clearer idea of how inflation differs across the country. With an annual rate of 9.0 percent, the Mountain West has the highest inflation, owing mostly to rising home and rent prices; shelter costs in the mountain area are rising nearly twice as fast as the national average. States in the Midwest and South have the highest inflation rates, about 7.9%, while states in the Northeast have lower inflation rates, at 6.1 percent to 6.6 percent. While the Northeast has the lowest inflation rate in comparison to the rest of the country, it still has historically high inflation, with prices rising more than three times faster than the Federal Reserve’s objective of 2.0 percent.
Annual Inflation Rates and Monthly Household Inflation Costs by Census Division, January 2022 Figure 2: Annual Inflation Rates and Monthly Household Inflation Costs by Census Division, January 2022
In dollars, how much does inflation rise each year?
A 1.2 percent inflation rate was projected for 2020. The average annual inflation rate was 3.5 percent between 1979 and 2020, according to the data. The price rise was 296.75 percent overall. In the beginning of 2021, an item that cost 100 dollars in 1979 was charged 396.75 dollars.
What is the inflation rate for 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.
What is the inflation rate during the last ten years?
According to the United States Federal Reserve, the 10-year breakeven inflation rate was 2.86 percent in March 2022. United States – 10-Year Breakeven Inflation Rate has a history of reaching a high of 2.95 in March 2022 and a low of 0.04 in November 2008.
What will be the rate of inflation in 2022?
According to a Bloomberg survey of experts, the average annual CPI is expected to grow 5.1 percent in 2022, up from 4.7 percent last year.
Why is inflation in 2022 so high?
As the debate over inflation continues, it’s worth emphasizing a few key factors that policymakers should keep in mind as they consider what to do about the problem that arose last year.
- Even after accounting for fast growth in the last quarter of 2021, the claim that too-generous fiscal relief and recovery efforts played a big role in the 2021 acceleration of inflation by overheating the economy is unconvincing.
- Excessive inflation is being driven by the COVID-19 epidemic, which is causing demand and supply-side imbalances. COVID-19’s economic distortions are expected to become less harsh in 2022, easing inflation pressures.
- Concerns about inflation “It is misguided to believe that “expectations” among employees, households, and businesses will become ingrained and keep inflation high. What is more important than “The leverage that people and businesses have to safeguard their salaries from inflation is “expectations” of greater inflation. This leverage has been entirely one-sided for decades, with employees having no capacity to protect their salaries against pricing pressures. This one-sided leverage will reduce wage pressure in the coming months, lowering inflation.
- Inflation will not be slowed by moderate interest rate increases alone. The benefits of these hikes in persuading people and companies that policymakers are concerned about inflation must be balanced against the risks of reducing GDP.
Dean Baker recently published an excellent article summarizing the data on inflation and macroeconomic overheating. I’ll just add a few more points to his case. Rapid increase in gross domestic product (GDP) brought it 3.1 percent higher in the fourth quarter of 2021 than it had been in the fourth quarter of 2019. (the last quarter unaffected by COVID-19).
Shouldn’t this amount of GDP have put the economy’s ability to produce it without inflation under serious strain? Inflation was low (and continuing to reduce) in 2019. The supply side of the economy has been harmed since 2019, although it’s easy to exaggerate. While employment fell by 1.8 percent in the fourth quarter of 2021 compared to the same quarter in 2019, total hours worked in the economy fell by only 0.7 percent (and Baker notes in his post that including growth in self-employed hours would reduce this to 0.4 percent ). While some of this is due to people working longer hours than they did prior to the pandemic, the majority of it is due to the fact that the jobs that have yet to return following the COVID-19 shock are low-hour jobs. Given that labor accounts for only roughly 60% of total inputs, a 0.4 percent drop in economy-side hours would only result in a 0.2 percent drop in output, all else being equal.
Why is US inflation on the rise?
Inflation has risen in America as a result of rising demand and a supply shortage created by Covid-19’s global influence on trade.
The main drivers to the increase were price increases for food, power, and shelter. Following a 0.5 percent gain in December, the food index increased by 0.9 percent in January. In addition, the energy index rose 0.9 percent month over month.
Even after excluding volatile items like food and fuel, inflation increased by 6% on an annual basis. The growth was also fueled by a statewide lack of used cars. In January, used automobile prices were 40.5 percent more than a year before. In comparison to a year ago, housing costs have increased by 4.4 percent.
In an effort to curb spending and lower prices, the Federal Reserve has indicated that it will hike interest rates at its March meeting. Oxford Economics says in a letter to investors that the recent CPI data is likely to lead to rate hikes in the months ahead.
“Taming inflation is the Fed’s main priority.” These solid pricing statistics point to the Fed beginning its tightening cycle with a 50 basis point rate hike at its March policy meeting, followed by further rate hikes,” it wrote.
Even as the job market has rebounded back from its catastrophic dip, rising prices have hurt Joe Biden’s approval ratings. Last year, the US economy grew at a rate of 5.5 percent, the highest since 1984, and more than 1.6 million new jobs were added in the last three months.
According to a study done by the Associated Press-NORC Center for Public Affairs Research, only 37% of Americans approve of how Obama is handling the economy, as gas costs, food prices, and housing prices continue to rise.
“I realize food costs are rising,” Biden said in Virginia, acknowledging the price bump news. We’re doing everything we can to bring them down. He declared, “I’m going to work like the devil to bring down petrol prices.”
The White House warned on Wednesday, before of the current CPI announcement, that the latest consumer price snapshot could be high. “We predict a strong yearly inflation figure in tomorrow’s statistics,” White House press secretary Jen Psaki said. “Above 7%, as I believe some are forecasting, would not be surprising.”
“What we’re looking at are recent trends… monthly inflationary hikes are declining,” Psaki explained.
In 2021, which country will have the highest inflation rate?
Japan has the lowest inflation rate of the major developed and emerging economies in November 2021, at 0.6 percent (compared to the same month of the previous year). On the other end of the scale, Brazil had the highest inflation rate in the same month, at 10.06 percent.
What is the greatest inflation rate ever recorded in the United States?
The highest year-over-year inflation rate recorded since the formation of the United States in 1776 was 29.78 percent in 1778. In the years since the CPI was introduced, the greatest inflation rate recorded was 19.66 percent in 1917.
What is the inflation rate in China?
Inflation in China was 2.42 percent in 2020, down 0.48 percent from 2019. In 2019, China’s inflation rate was 2.90 percent, up 0.82 percent from 2018. The annual inflation rate in China was 2.07% in 2018, up 0.48 percent from 2017. In 2017, China’s inflation rate was 1.59 percent, down 0.41 percent from 2016.