US: Biden acknowledges 'more work to do with price increase' as inflation soars 7% in 2021

As the United States witnessed a record high year-on-year inflation rate, President Joe Biden confessed that the government has to ramp up steps to mitigate the "price increase." Noting the latest figures published by the US Bureau Labour Statistics (BLS), he added that although there has been a progress in curbing the acceleration of inflation, but  there is "more work to do" in order to bring the situation under control. His acknowledgment comes as food and fuel prices have been soaring in America, adding to political pressure on the president and Federal Reserves, Sky News reported.

"Inflation is a global challenge appearing in virtually every developed nation as it emerges from the pandemic-economic slump," Biden said.

As per the US BLS report, the inflation rate jumped by 7% in December 2021, which is the highest in nearly 40 years. The rate was upped from 6.8% in November, which was already the maximum since June 1982. The data has forced Federal Reserve chair, Jerome Powell, to state that the agency is mulling to hike interest rates from as early as March. Powell said that the Fed is ready to implement actions to prevent the situation from becoming "entrenched."

An increase in interest might be observed on borrowing costs, adding to mortgage and other loan repayment costs, which as per economists is slowing down the economy. The anxiety has also begun turbulence in the US stock markets, particularly tech shares, which enjoyed attractive investments at a low rate. The latest inflation report comes after Organisation for Economic Cooperation and Development (OECD) asserted that the inflation of its 38 member countries touched a record high last November

US inflation hit a 40-year-high in December 2021

The rise in household costs and eroding wage growth due to intractable supply-chain bottlenecks are dubbed as the largest dangers to the US economy. As per the US Today, the latest highest rise in December was the third subsequent month in a row that US policymakers observed. Since October the rates have remained over 6%, which was beyond the expected 2%, bringing it to nearly 7% last month.

The December spike affected prices of basic supplies like food, rent, fuel, in turn, vehicles. Staff shortages due to the two-year-long running COVID-19 pandemic have also levied a heavy blow on the US economy. Housing expenses increased by 4.1% year-on-year, grocery prices spiked by 6.5% and used car prices rose by more than 37% than last year, BBC reported. Slowed shipments have also aggravated the sweeping impact of the pandemic. Inflation increased by 0.5% in November compared to its previous month's 0.8%.

(Image: AP)