US inflation surged to 7% in December compared to the same month last year, marking the seventh consecutive month above 5%, according to data from the Labor Department. The consumer price index (CPI) rose 0.5% from November, driven by increases in housing and used cars.
Price rises in housing and used vehicles were the largest contributors, with used car prices jumping 3.5% month-on-month. Food prices also rose 0.5%, though at a slower pace than earlier in 2021. The average price of a used vehicle in November was $29,011, up 39% year-on-year.
The figures deal a blow to the Biden administration and the Federal Reserve, which had previously described soaring prices as 'transitory' due to pandemic-related supply chain disruptions. The Fed now plans to raise interest rates three times in 2022, possibly starting in March, to curb inflation.
Fed Chair Jerome Powell told Congress on Tuesday that the central bank must move away from emergency pandemic measures, citing a 'mismatch between demand and supply.' White House press secretary Jen Psaki said the administration expects month-over-month inflation to moderate in coming months but stressed the need for Congress to pass President Biden's Build Back Better bill to lower costs.
