Daily Column – 13th January 2022

Your top business storey for 2021 was rising prices, and it just started its 2022 campaign with a big splash. Consumer prices rose by 7% in December, the biggest year-over-year rise since 1982, the Labor Department said yesterday.

There are two main reasons: rent and used car prices.

When it comes to housing, prices rose by 0.4% in the last month and 4.1% over the last year, which is the fastest annual growth since February 2007.

There has been a big rise in the prices of used cars, which have become a symbol of the current inflationary environment. Over the last year, used cars have risen by 37 percent.

As of December 2020, the price of gasoline has risen by more than 50%. The cost of fuel and energy has gone down a little this month.

And even though many Americans have been given a raise this year, pay raises haven’t kept up with the rise in the cost of things. In December, real average hourly earnings, or wages that take inflation into account, were down 2.4% from the same time last year.

What can I do?

Its job is to keep prices in check. After being caught off guard by rising prices, the central bank is now planning to cut back on stimulus and raise interest rates several times this year. The point is that when interest rates go up, it makes it more difficult for people and businesses to borrow money, which slows down demand, encourages more saving, and lowers prices.

Other thoughts: An antitrust campaign against businesses with a lot of power was put into place by the Biden administration. They think more competition will make prices go down as a result. And the US Chamber of Commerce said that more immigrants would help solve the problem of too few workers.

But some experts say that giving Gatorade to a 40-year-old who has been drinking isn’t going to help. They say that the only way to get over it is to wait it out. There are still bottlenecks in the supply chain caused by Covid, which is why prices will only start to go down when limited supply meets demand.

Some of those bottlenecks could get even worse in the long run China, the world’s largest manufacturer, has shut down about 20 million people in three cities in an effort to stop an Omicron outbreak that could spread across the country. HSBC economists say that if the Big O takes off in Asia, where it hasn’t yet, it could cause the “mother of all” supply chain disruptions by taking factories offline for the second time in the same place.

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