By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News – February 10, 2022
U.S. inflation again reached a record, hitting 7.5% in January 2022 on annual terms. This is the highest level of inflation never seen in the United States since February 1982 and the dynamic has been here for months. U.S. annual inflation hit 7% in December 2021, 6.8% in November and 6.2% in October.
These figures raise the likelihood that U.S. Federal Reserve officials would accelerate the increases of key interest rates and the cut in the assets purchase programs from March 2022.
The U.S. Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 7.5 percent before seasonal adjustment. Increases in the indexes for food, electricity, and shelter were the largest contributors to the seasonally adjusted all items increase.
The food at home index rose 7.4 percent over the last 12 months. All of the six major grocery store food group indexes increased over the period. By far the largest increase was that of the index for meats, poultry, fish, and eggs, which rose 12.2 percent over the year. The index for dairy and related products increased 3.1 percent, the smallest 12-month increase among the groups.
The general food index rose 0.9 percent in January following a 0.5-percent increase in December 2021.
The energy index rose 27.0 percent over the past 12 months with all major energy component indexes increasing. The gasoline index rose 40.0 percent over the last year, despite declining in January. The index for natural gas rose 23.9 percent over the last 12 months, and the index for electricity rose 10.7 percent.
The energy index also increased 0.9 percent over January, with an increase in the electricity index being partially offset by declines in the gasoline index and the natural gas index. The index for all items less food and energy rose 0.6 percent in January, the same increase as in December. This was the seventh time in the last 10 months it has increased at least 0.5 percent.
Along with the index for shelter, the indexes for household furnishings and operations, used cars and trucks, medical care, and apparel were among many indexes that increased over the month.
The all items index rose 7.5 percent for the 12 months ending January, the largest 12-month increase since the period ending February 1982. Without food and energy, the all items index still rose 6.0 percent, the largest 12-month change since the period ending August 1982. The energy index rose 27.0 percent over the last year, and the food index increased 7.0 percent.
Over January, the index for all items less food and energy rose 0.6 percent, the same increase as December. The shelter index increased 0.3 percent in January as the rent index increased 0.5 percent and the owners’ equivalent rent index rose 0.4 percent. The index for household furnishings and operations rose 1.3 percent over the month following a 1.1-percent increase in December. The used cars and trucks index rose 1.5 percent in January, a deceleration from the 3.3-percent increase reported in December.
The medical care index rose 0.7 percent in January. The index for hospital services increased 0.5 percent and the index for prescription drugs rose 1.3 percent, while the index for physicians’ services declined 0.1 percent. Other indexes that rose in January include recreation (+0.9 percent), apparel (+1.1 percent), personal care (+1.0 percent), airline fares (+2.3 percent), and education (+0.2 percent).
Only a few indexes decreased in January; among those that did were lodging away from home (-3.9 percent) and wireless telephone services (-0.1 percent). The index for new vehicles was unchanged over the month.
The index for all items less food and energy rose 6.0 percent over the past 12 months. Major contributors to this increase include shelter (+4.4 percent) and used cars and trucks (+40.5 percent). However, the increase is broad-based, with virtually all component indexes showing increases over the past 12 months.
Facing enduring high inflation, investors and families are seeking hedge to protect their wealth and purchasing power. Gold prices hit $ 1,827 per troy ounce today, gaining 1.05% in one day, while silver prices reached $ 23.19 per ounce, gaining 2.98%.
Read also : Gold, Build Your Wealth and Freedom
The U.S. Fed is accountable
How much time will the U.S. Federal Reserve use the covid pandemics as the main explanation for high inflation ? Since the start of the coronavirus crisis in February-March 2020, the Fed has injected the markets with 120 billion US dollars in liquidity each month, through the purchase of 80 billion treasury bills and 40 billion MBS. To briefly say it, the Fed has printed 120 billion of US dollars each month for more than 18 months. High inflation is a logical consequence.
Such large-scale money printing was done on the grounds of further easing credit and supporting the economy constrained by the administrative lockdowns decided by the state authorities. Now that the American economic recovery is on track, the US Central bank will no choice but to start putting away its anti-crisis tools. However, Jerome Powell, Chairman of the Fed, and his team want to progressively implement the tappering, as they fear to breack the economic recovery.
The Consumer Price Index for February 2022 is scheduled to be released on Thursday, March 10, 2022 at 8:30 a.m. (ET).
Read more about gold and inflation with Gold : Build Your Wealth and Freedom
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© Copyright 2022 – Swann Collins, investor and consultant in international affairs.