According to U.S. Labor Department data published March 10, the annual inflation rate in the United States was 7.9 percent for the 12 months ended February 2022, the highest since January 1982 and after reaching 7.5 percent earlier. On April 12, at 8:30 a.m. ET, the next inflation update will be released. It will provide the inflation rate for the 12-month period ending March 2022.
Annual US inflation rates are shown in the chart and table below for calendar years 2000 to 2022. (Historical inflation rates can be found here.) The US Inflation Calculator can be used to calculate accumulated rates between two separate dates.
What is the current 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.
On an annual average basis, the CPI rises at the fastest pace since 1991
Following a 0.7 percent increase in 2020, the CPI increased by 3.4 percent on an annual average basis in 2021. This was the fastest growth rate since 1991 (+5.6%).
The annual average CPI climbed 2.4 percent in 2021, slightly faster than in 2020 (+1.3 percent) and slightly faster than in 2019 (+2.3 percent).
Seven of eight major CPI components up in 2021
Transportation prices (+7.2 percent) increased at the quickest rate among the eight major components. Clothing and footwear costs fell 0.3 percent in 2021, making it the only significant component to dip in the previous year.
Higher prices in all provinces and territorial capital cities
Prince Edward Island had the highest annual average price increase (+5.1%), followed by Nova Scotia (+4.1%). Saskatchewan (+2.6 percent) had the slowest price growth among the provinces.
Annual average prices rose the highest in Whitehorse (+3.3%), followed by Yellowknife (+2.2%), and the slowest in Iqaluit (+1.4%) among the territorial capital cities.
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.
Why is inflation so detrimental to the economy?
- Inflation, or the gradual increase in the price of goods and services over time, has a variety of positive and negative consequences.
- Inflation reduces purchasing power, or the amount of something that can be bought with money.
- Because inflation reduces the purchasing power of currency, customers are encouraged to spend and store up on products that depreciate more slowly.
How long do you think inflation will last?
WASHINGTON, D.C. It was a horrible surprise last year. It wasn’t supposed to last, either. However, for millions of Americans loading up at the gas station, waiting in line at the grocery checkout, buying for clothes, haggling for a car, or paying monthly rent, inflation has become a continual financial pain.
The Labor Department reported Thursday that inflation for the 12 months ended in January was 7.5 percent, the fastest year-over-year rate since 1982. Even when volatile food and energy prices are excluded, core inflation increased by 6% in the past year. That was also the most significant increase in four decades.
Consumers feel the pinch in their daily lives. Prices for old automobiles and trucks have increased by 41% in the last year, 40% for fuel, 18% for bacon, 14% for bedroom furniture, and 11% for women’s clothes.
The Federal Reserve did not expect such a severe and long-lasting inflation wave. Consumer inflation would remain below the Fed’s 2% annual objective, ending 2021 at roughly 1.8 percent, according to Fed policymakers in December 2020.
Is inflation beneficial or harmful?
- Inflation, according to economists, occurs when the supply of money exceeds the demand for it.
- When inflation helps to raise consumer demand and consumption, which drives economic growth, it is considered as a positive.
- Some people believe inflation is necessary to prevent deflation, while others say it is a drag on the economy.
- Some inflation, according to John Maynard Keynes, helps to avoid the Paradox of Thrift, or postponed consumption.
What is the cost-of-living adjustment for 2022?
Social Security recipients frequently receive an annual cost-of-living adjustment to assist them keep up with the changing cost of living (COLA). The COLA is calculated each year based on changes in the Consumer Price Index.
Benefits from Social Security and Supplemental Security Income (SSI) will increase by 5.9% in 2022. More than 70 million Americans will experience a change in their benefit payments as a result of this.
How do you ask for an inflation increase?
“The rate of inflation is increasing rapidly, and I’d like to talk to you about my existing wage and how we’re making sure that it stays equitable to compete in the current inflation rate,” Mustain suggests starting the conversation with your manager.
You might even bring up the inflation rate later in the meeting to bolster your case for more pay. Remember that your performance is the most essential argument in the conversation whenever you decide to bring it up.
Angelina Darrisaw, a career coach and founder and CEO of C-Suite Coach, advises, “Focus your conversation on the value you bring since that’s ultimately what will convince your employer to give you that wage boost.”
Consider the constraints of your employment and the objectives your supervisor set for you, then describe how you fulfilled or exceeded those objectives. Assume you’re a salesperson with a monthly goal of 30 sales. Make a big deal out of it if you’ve routinely made 35.