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US Inflation Reaches 6.1% in January, Highest Single-Year Increase in 40 Years

© REUTERS / CAITLIN OCHSFlags are seen outside the New York Stock Exchange (NYSE) in New York City, where markets roiled after Russia continues to attack Ukraine, in New York, U.S., February 24, 2022.
Flags are seen outside the New York Stock Exchange (NYSE) in New York City, where markets roiled after Russia continues to attack Ukraine, in New York, U.S., February 24, 2022. - Sputnik International, 1920, 25.02.2022
The US is experiencing levels of inflation not seen in decades, caused by many factors both internal and external. Some experts predict that inflation in the country will remain high and could even accelerate in the coming months.
Americans are facing steep price rises with an inflation surge of 6.1% in January compared to a year ago, the newly released inflation index by the Bureau of Economic Analysis showed.
According to Friday's report, the Commerce Department recorded the highest year-over-year increase since 1982. Core inflation jumped 5.2% in January from a year ago, excluding volatile food and energy prices. Consumer spending has surged, combined with widespread product and labor shortages to produce the biggest inflation in four decades, putting a strain on American households, particularly lower-income people who are paying more for food, gas, and rent.
Consumers, on the other hand, mostly ignored higher prices last month, increasing their spending by 2.1% from December to January, according to the report, a positive indication for the economy and employment market. This was a significant improvement from December, which saw a decrease in spending.
Pay hikes have been given to Americans of all income levels, and they have accumulated more savings than they did before the pandemic struck two years ago. This increased savings pool will be used to fund future spendinпg, according to the BEA.
Some experts quoted in the media, such as those who have spoken to the Washington Times, said that the new batch of US sanctions imposed against Russia due to its military operation in Ukraine could ramp up the inflation rate for the US quite significantly.
The Federal Reserve building is pictured in Washington, D.C., U.S., August 22, 2018. - Sputnik International, 1920, 29.11.2021
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Still, in his Thursday address, President Joe Biden said that he will do "everything I can" to keep gas costs low for the average American, despite fears that the crisis in Ukraine could disrupt global fuel supplies and cause a price spike.
Biden did not, however, go into specifics, but he did discuss the possibility of more oil being released from the nation's strategic reserves. He also advised that oil and gas corporations "should not exploit this moment" by boosting gas prices.
According to a separate study on the nation's economy quoted by the outlet, orders for durable manufactured goods increased dramatically in January, with demand for airplanes leading the way. The data reportedly showed that many businesses are eager to increase their investments in industrial equipment and other commodities, indicating that they are optimistic about the economy.
"Overall, the real economy appears to be in stronger health than we feared," chief US economist at Capital Economics, Paul Ashworth, is quoted in the report as saying.
Despite a record-breaking increase of COVID-19 infections in January due to the omicron variant, the US economy fared better than many economists predicted, according to Commerce Department data. Last month, the United States added 467,000 jobs, and consumer spending rebounded substantially following a fall in December.
Personal incomes, on the other hand, only increased by 0.1% after accounting for rising costs, compared to a 0.2% rise in December.
Overall prices increased by 0.6% from December to January, compared to 0.5% the prior month. Paychecks in the United States are continuously increasing. In January, average hourly wages increased by 5.7% over the previous year.
The inevitable spike in inflation due to recent events has put more pressure on the Federal Reserve, which is reportedly forecast to raise interest rates by a quarter-point as many as five or six times this year, starting in March.
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Experts note that the Fed's mission of raising rates just enough to keep inflation in check without tipping the economy into recession has become increasingly difficult.
Officials at the Federal Reserve want inflation to return to its target of 2%, as assessed by the Commerce Department's gauge. In December, Fed officials reportedly predicted that inflation would fall to just 2.7% by the end of the year, according to their preferred gauge, which some economists in the media believe is increasingly unrealistic.
The agency is expected to update the projections by the end of March.

Biden Must Focus on Weak Economy as Top Priority, New Poll Says

Meanwhile, according to Friday's Pew Research Center poll, more and more Americans said Biden must focus on strengthening the weak US economy as inflation continues to run at a 40-year high.
“More Americans say strengthening the economy should be a top policy priority for Biden and Congress to address this year than say the same about any other issue,” a release on the poll said. “Most US adults (71%) identify this as a top concern.”
The second most important issue for Americans was reducing health care costs, 61% of respondents said. Dealing with the COVID Pandemic came next (58%) closely followed by improving education (58%) and protecting Social Security (57%), the release said.
“Large majorities of Americans say prices for food and consumer goods (89%), gas prices (82%) and the cost of housing (79%) are worse than they were a year ago. Only 28% rate economic conditions as excellent or good,” the release added.
Only about half of Americans currently view improving the job situation as a top priority (52%), compared with 67% last year, and the same number expressed concern about controlling immigration and improving the political system, according to the release.
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