A 40-year-record set last month by rising U.S. inflation repeated itself, and then some, with new federal data reflecting January saw another record rise in consumer prices.
The U.S. Department of Labor reported Thursday that consumer prices jumped 7.5% last month compared with a year earlier, the steepest year-over-year increase since February 1982. The acceleration of prices ranged across the economy, from food and furniture to apartment rents, airline fares and electricity.
The news comes on the heels of a new Deseret News/Hinckley Institute of Politics poll that found well over 90% of Utahns are worried about inflation and most believe price increases aren’t going away any time soon.
Prices for a broad range of goods and services accelerated from December to January — and not just for items directly affected by the pandemic. Apartment rental costs rose 0.5% in January, the fastest pace in 20 years. Electricity prices surged 4.2% in January alone, the sharpest rise in 15 years, and are up 10.7% from a year earlier. Last month, household furniture and supplies rose 1.6%, the largest one-month increase on record dating to 1967.
Food costs, driven by pricier eggs, cereal and dairy products, increased 0.9% in January. Air fares rose 2.3%. New car prices, which have jumped during the pandemic because of a shortage of computer chips, were unchanged last month but are up 12.2% from a year ago. The surge in new-car prices has, in turn, accelerated used-car prices; they rose 1.5% in January and are up a dizzying 41% from a year ago.
Deseret News/Hinckley Institute of Politics polling conducted Jan. 20-28 of 815 registered Utah voters found 93% of respondents are somewhat or very concerned about inflation with 7% weighing in as not very or not at all concerned with the issue. And, of those who registered some level of concern, 64% believe inflation impacts will be long term and prices will continue to climb while 26% of poll participants feel that inflation will be temporary and the costs of goods and services will stabilize.
The results come with a plus or minus 3.43 percentage point margin of error.
U.S. consumer prices have been on the rise for over 18 months and jumped some 7% in December, the fastest year-over-year rise since 1982. January’s 7.5% increase marks the fourth month in which the inflation rate came in at 6% or more over 2020.
While supply chain issues, along with a nationwide labor shortage and unprecedented levels of COVID-19 related federal stimulus subsidies flowing into the economy have exacerbated inflationary pressures, the Federal Reserve appears ready to push back on rising inflation by employing its most powerful tool — hiking interest rates.
Thursday’s report will intensify pressure on the Fed and its chair, Jerome Powell, to tighten credit to try to slow the economy enough to cool inflation. Powell signaled two weeks ago that the central bank would likely raise its benchmark short-term rate multiple times this year, with the first hike almost surely coming at its next meeting in March. Given the latest inflation data, some economists and investors say the Fed may decide to raise its key rate in March by one-half a percentage point, rather than its typical quarter-point hike.
The new polling data reflects inflation concerns, like consumer prices, have been on the rise for Utahns when compared to responses gathered in a July Deseret News/Hinckley Institute of Politics poll.
In that survey, 85% of Utahns said they were very or somewhat concerned about inflation. And among that group, 25% said higher prices would be “temporary” versus 60% who believe inflation will be a “lasting” issue.
West Jordan resident Sheryl Cronin participated in the new Deseret News poll and said she and her partner have been able to absorb the extra costs that have come with rising inflation but navigated its impacts in a very acute way last summer.
“We felt it the most when we purchased a house last June,” Cronin said. “The price was intense for us.”
Cronin said the unexpectedly big cash outlay in the midst of a red-hot Utah housing market was somewhat offset by getting a lot more than she expected when selling a condo ahead of buying her new home, getting double what she paid less than 10 years ago for the unit.
But she also noted higher prices were having some influence on decisions about whether to dine out and what to buy at the grocery store.
Contributing: Associated Press