The Labor Department’s new data reveals that consumer inflation rose by about 0.8% in December, resulting in inflation rising about 7% annually for 2021. This is the highest annual rate recorded in four decades. While inflation continues to rise and is at a high, economists do believe that it will moderate into 2022. The inflation rate was only 6.8% in November. Because of this December increase, then we may see inflation rise again into 2022 before it does officially start to moderate. However, even if it does moderate, the inflation rate may not decrease until much later.
It appears that inflation has risen for many reasons this past month, though the consumer price index was increased by the price of used cars, as well as other goods. Mainly, the increase in cars and shelter — everything from rent to buying new homes — has caused the index to increase again.
However, the price of food has increased, though only slightly. According to this new data, the food index only rose by about 0.5% in December. Meanwhile, the energy index has fallen again as gasoline and natural gas decreased in December by about 0.4%.
Inflation has already caused many worries for employees, employers, and consumers in the United States. Many employers are still struggling to hire an accurate amount of workers, as the nation is still going through a labor shortage. People are voluntarily quitting or retiring and many workers are not returning to the workforce in the mass amount that economists thought they would. This has left many employers without a full staff which has made business activity falter in some areas, especially as the Omicron variant spreads throughout the nation.
To sway more workers to work for them, many employers have begun to offer higher wages. However, data shows that even these higher wages have not been able to meet the standard that inflation has now set. If inflation continues to rise, then this will hurt businesses even more, as fewer people will buy more expensive goods.
There are signs that inflation will moderate and perhaps lower in 2022. One of the main obstacles the country — and the world — is currently facing has to do with all of the many global supply chain problems. However, there are signs that seem to suggest the supply chain will finally work itself out and get back to an efficient flow of goods and products. If this happens, this will definitely help businesses around the country and the world. It will also help with high prices.
Of course, this could all change if the Omicron variant continues to negatively impact how businesses are able to conduct business. The supply chain has been hit hard by each wave of the pandemic. Right when it was attempting to work itself out in 2021, the Delta variant made things more difficult. Now, many are worried that the Omicron variant could hinder any progress that has been made in regards to the global supply chain.