Inflation Indicator Reaches 39-Year High

A key inflation indicator tracked by the Federal Reserve climbed 5.8 percent last year, marking its steepest increase in 39 years.

That’s according to the U.S. Commerce Department, which also reports consumer spending on items like vehicles, electronics, furniture and appliances dropped by 0.6 percent in December.

Despite the lull in spending, however, the average American income rose 0.3 percent that month, per the Commerce Department. Despite the rise in inflation and drop in consumer spending, at least one economist says he expects both to even out later this year.

“You’re going to see the labor market continue to heal, and, the pandemic permitting, the consumer will have enough firepower to grow spending at a reasonable rate as the year goes on,” says Joshua Shapiro, chief economist at MFR Incorporated.

A measure of prices that is closely tracked by the Federal Reserve rose 5.8% last year, the sharpest increase since 1982. https://t.co/7Cs2eDhBJu

— World News Tonight (@ABCWorldNews) January 28, 2022