A key measure of inflation jumped 5.8 percent in December compared to one year earlier, the Bureau of Economic Analysis said Friday.
The Federal Reserve’s preferred measure of inflation, the Commerce Department’s Personal Consumption Expenditures index, increased again last month, after previously hitting 5.7 percent in November.
The December spike was the largest since 1982.
Meanwhile, the core PCE, which excludes volatile food and energy prices, rose 4.9 percent year-over-year.
The figures follow a Labor Department report released earlier this month that showed the consumer price index, a major inflation gauge, surged 0.5 percent in December and 7.0 percent for the last twelve months ending in December, representing the largest annual spike since June 1982, when inflation hit 7.1 percent.
President Biden has claimed that supply chain disruptions caused by the Covid-19 pandemic is partially to blame for the rising inflation. Biden’s National Economic Council director, Brian Deese, called the price increases a “global phenomenon” that “reflect the nature of the global challenge of coming through a pandemic crisis” and recovery earlier this month.
Deese said during a White House press briefing that the U.S. is in a “uniquely strong economic position” despite Americans encountering rising prices and empty shelves in stores across the country.
He crafted a story in which the U.S. had excelled economically last year, noting that it experienced the largest decline in unemployment, most jobs created and the strongest economic growth in nearly 40 years. However, he failed to acknowledge that those figures come in the wake of record destruction on the economy brought on by the early days of the Covid-19 pandemic.
Biden has been patting himself on the back after the U.S. gross domestic product grew at 6.9 percent in the fourth quarter. He called the growth “no accident.”
“My economic strategy is creating good jobs for Americans, rebuilding our manufacturing, and strengthening our supply chains here at home to help make our companies more competitive,” Biden said.
Meanwhile, the Federal Reserve signaled Wednesday that it will likely raise interest rates in March in an effort to temper an overheating economy and soaring inflation.
“The committee is of a mind to raise the federal funds rate at the March meeting assuming that the conditions are appropriate for doing so,” Federal Reserve chair Jerome Powell said at a press briefing.
He added that inflation “has not gotten better. It has probably gotten a bit worse. . . . To the extent that situation deteriorates further, our policy will have to reflect that,” Reuters reported. “This is going to be a year in which we move steadily away from the very highly accommodative monetary policy we put in place to deal with the economic effects of the pandemic.”