US inflation hits four-decade high

Inflation in the United States was as hot as ever last month, with consumer prices seeing their largest annual jump in nearly four decades as costs rose for a wide range of items.

The Labor Department said its consumer price index (CPI) climbed 7.5 per cent over the 12 months to January, its largest increase since February 1982, while it rose by 0.6 per cent compared to December, more than analysts expected.

The data defied hopes by President Joe Biden's administration that the wave of price increases sapping his public approval would show signs of decelerating in the first month of 2022, and further bolstered expectations that the Federal Reserve will soon increase interest rates. "The political pressure on the Fed from the highest headline inflation rate... since February 1982 will only increase," Ian Shepherdson of Pantheon Macroeconomics said.

An array of factors is seen as driving the price increases, from the Fed's easy money policies meant to support the economy during the pandemic to supply chain snarls, shortages of components and labour and robust demand from American consumers.