US inflation rate up to nearly 40-year high of 7%
By the end of 2022, the US inflation rate is likely to exceed 3%.
Inflation in the United States is hitting new highs and is likely to continue into 2022. Consumer prices rose 0.5% in December, causing the inflation rate to hit nearly 7%, which constitutes the highest rate in 40 years in the North American country.
The gain in the consumer price has gone beyond the 0.4% prediction that economists posited in The Wall Street Journal.
The US government said on Wednesday that a separate measure of consumer inflation that rules out volatile food and energy values rose 0.6% in December, pushing the previous year's increase to 5.5% from 4.9%, constituting the highest in 31 years.
The US current inflation situation can be attributed to increasing customer demands and labor, as well as supply shortages. By the end of 2022, inflation rates are likely to exceed 3%.
This is an alarming number. Why? Before the effects of the pandemic, inflation averaged 1.5% a year approximately.
To deal with inflation, the central bank plans to raise short-term interest, while the Federal Reserve plans to remove stimulus for the economy, “The economy no longer needs or wants the very highly accommodative policies we’ve had in place to deal with the pandemic and the aftermath,” Fed Chairman Jerome Powell said on Tuesday.
US weekly jobless claims see a moderate rise
Last week, claims for unemployment benefits increased 7,000 to a seasonally adjusted 207,000 for the week which started on January 1, 2022.
The number of US citizens who are filing claims for unemployment benefits rose last week unexpectedly as COVID-19 infections surpassed a million in the US, disrupting the economy and business activities.
The increase is moderate, as projected by the US Labor Department on Thursday. There is a shortage of works in the workforce, and the number of infections of the Coronavirus - driven by Omicron - is expected to peak soon.
"It is possible that the recent spread of COVID has put that earlier downward trend on hold," Daniel Silver, an economist at JPMorgan, said "That said, it is an encouraging sign for the labor market that claims have not meaningfully jumped in response so far."