High prices continue to hit American shoppers as inflation rose faster than expected to 7.5 percent for the month of January over the previous year, exceeding the 40-year high set in December.
The latest release of the monthly Consumer Price Index by the Bureau of Labor Statistics on Thursday shows that price increases were most pronounced in food, electricity and shelter.
The indexes for food and energy each rose 0.9 percent, and the index for shelter rose 0.3 percent.
The “core” consumer price index, minus the more volatile food and energy indexes, rose 0.6 percent in January, the same as in December.
Indexes for household furnishings and operations rose 1.3 percent, used cars and trucks increased by 1.5 percent, medical care went up 0.7 percent, and apparel increased by 1.1 percent.
The rise in consumer prices appears to be sticking around, despite earlier claims by Federal Reserve Chair Jerome Powell that the effects would be transitory.
Throughout the pandemic, as demand soared and shifted, snarling supply chains and backing up ports, manufacturers have raised prices across the marketplace, from food to home goods to car parts.
In the NBC News grocery tracker, the national average for egg prices rose the fastest in January, up 11 cents, according to supermarket checkout data from NielsenIQ. Orange juice increased the most, up 12 cents. Bacon prices decreased slightly, down 5 cents, but remain extremely elevated, up $1.24 from a year ago.
But as annual supply contracts began to be renegotiated in the fourth quarter, major manufacturers are not just passing along increased input, labor and transportation costs to consumers, they’re also increasing their profit margins.
Amazon, Disney, Mattel and Starbucks and other major consumer-facing companies recently announced likely price increases for 2022.
Consumers with pent-up demand, increasing access to loosening credit and savings in the bank, have largely shrugged off these hikes and kept up their appetite for swiping and shopping.
“Despite heroic efforts and a record year of production, we were unable to keep pace with accelerating consumer demand,” Michele Buck, chief executive and chairman of the Hershey Co., said during an earnings call last week. Like many manufacturers, the company is trying to add more labor and production capacity, adding four lines during the last year, but cited the omicron surge as increasing worker absenteeism and slowing output. The hamstringing will persist “until the second half of the year,” she said. In the meantime it would be “optimizing our promotional calendar.”
Manufacturers slashed coupons and promotions following the spike in demand when the pandemic hit in March. They have since eased some promotions back but they still haven’t returned to pre-pandemic levels.
The question is how long they can stomach the price increases. According to a new survey of adult Americans by the financial site eMoney, gas prices, the ability to pay bills and inflation were their top three concerns for 2022.
“Major economic issues are affecting Americans every day, from high gas prices to inflation,” Celeste Revelli, the site’s director of financial planning, said in a statement. “Concerned about their families’ futures, people now more than ever are looking for ways to prioritize their responsibilities and achieve financial peace of mind.”
In an attempt to curb inflation that shows no immediate signs of abating, the Federal Reserve has announced three price increases for 2022, with the first to begin in March.
Stocks fell Thursday morning as the inflation figure beat consensus expectations which had predicted just a 7.2 percent increase.
The Nasdaq Composite fell 1.7 percent, the S&P 500 lost 1.1 percent and the Dow Jones Industrial Average dropped by 230 points, or 0.6 percent.
Haley Messenger contributed.
Source: | This article originally belongs to Nbcnews.com
