Inflation rose 7.5% over the last year, the fastest rate in four decades, The New York Times reports.
The Consumer Price Index for January showed that prices grew by 7.5% over the last year, rising another 0.6% last month.
Though the rate of inflation growth has slowed since last year, the yearly rate is the fastest rise since 1982.
Forecasters expected that inflation will fall closer to 3% by the end of the year, though projections similarly showed that inflation rates would fall last year as well.
The Federal Reserve’s inflation target is 2%.
The price increases in January were driven by costs of food, electricity, and shelter.
“It was more than expected, and it was broad-based,” Priya Misra, head of global rates strategy at T.D. Securities, told the Times. “We’ve gotten used to these big headline numbers, but every aspect of ‘transitory’ you can push back against now.”
Inflation increases appear to be driven more by the strong economy than the pandemic.
Price increases last year were largely driven by supply chain issues, which caused car and furniture prices to soar.
Those factors continue to play a big role but rents and shelter costs have also become a key driver.
Fed expected to raise rates:
The growing inflation has caused the Federal Reserve to move away from its low-interest rates aimed at spurring economic growth.
The Fed is expected to raise interest rates six times this year in an effort to tamp down price increases.
“Making appropriate monetary policy in this environment requires humility, recognizing that the economy evolves in unexpected ways,” said Fed Chair Jerome Powell.
The White House has also tried to address supply chain issues.