WASHINGTON — Inflation soared over the past year at its highest rate in four decades, hammering America's consumers, wiping out pay raises and reinforcing the Federal Reserve's decision to begin raising borrowing rates across the economy.
The Labor Department said Thursday that consumer prices jumped 7.5% last month compared with 12 months earlier, the steepest year-over-year increase since February 1982.
Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation accelerating in the past year. High inflation rates have affected the prices of essential goods — everything from gasoline to groceries.
The Federal Reserve last month signaled that it would raise key interest rates in March, a move that's expected to combat high consumer prices.
High inflation continues to drag down a U.S. economy that's attempting to recover rapidly from 2020's COVID-19 recession. The unemployment rate has fallen to about 4%, nearing pre-pandemic levels. Last month, the U.S. economy added nearly half a million jobs, despite bleak projections from forecasters concerned about the fast-spreading omicron variant.