News about inflation is taking increasingly center stage – not just as one of the main stories but the top headline news on some days. While inflation rose at the fastest pace in nearly 40 years in December, the prices of some household items are falling, including the price of food at work and at school, specifically food at elementary and secondary schools.
The increase in prices has triggered several concerns, including whether people can afford gasoline for their cars, whether they can afford higher car prices, and whether mortgage rates will rise quickly from historic lows. Even the cost of some foods has soared. Add to these concerns the anxiety of whether wages will rise fast enough to keep pace with the daily cost of living. (Water, too, is increasing in price – this city has the most expensive water in the world.)
The Federal Reserve and Treasury Secretary Janet Yellen said last May that they didn’t anticipate inflation to be a major problem and that any rise in prices would be temporary. Both the Fed and Yellen reversed course when it became evident that prices, particularly of consumer goods, are rising sharply. Essential to nearly all aspects of the economy, the price of this household item is soaring.
Fed Chair Jerome Powell recently said that he expects several rate increases this year, as the U.S. central bank tries to bring inflation down quickly. During a Senate Banking Committee hearing recently Powell told lawmakers, “If we see inflation persisting at high levels longer than expected, if we have to raise interest rates more over time, we will.”
There is a school of thought that Powell is already too late. Harvard economics professor and former Treasury Secretary Secretary Larry Summers warned that officials remain too optimistic about their ability to quickly curb inflation. On an even stronger note, when considering threats to the global economy, a Bloomberg analysis listed inflation above the omicron COVID-19 variant.
The severity of the inflation problem has received some new support. The Labor Department reported that the consumer price index rose 7% in December. That is the fastest pace since 1982. It is also the third month in a row during which the inflation figure has topped 6%.
Several reasons are usually cited for the sharp pickup in prices. One is the effect of COVID-19 on supply chains. Goods that would normally be produced and moved easily through delivery systems like rail and trucking have been slowed by employee shortages, which have become even more severe since the omicron outbreak. Tens of thousands of people have needed time off because they have been infected. This rate of infection is unlikely to drop in weeks to come.
Another trigger of inflation is the higher wages – the result of a lack of labor. Millions of jobs are currently open in the U.S. There are several theories as to why. Among them is a surge in people retiring due to the pandemic. Another is that government assistance has allowed some people to stay out of work longer as they look for better jobs than their previous ones.
Fortunately, not all prices have risen. The prices of some items Americans regularly use have remained the same – and some have even fallen significantly in December 2021 compared to December 2020.
24/7 Wall St. reviewed the recent BLS consumer price index report to find the household items with the largest decline in prices in December 2021 compared to the same month last year. Among these items are computers and smartphones, some apparel, and health insurance.
And the prices of what people pay to eat at school and work are falling the fastest. These are down nearly 50% or more.
Click here to see the price of this household item is falling
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