Price inflation in the United States is getting out of control. Americans are seeing prices rise at the fastest rates in 40 years. Until recently, the Federal Reserve — the agency tasked with ensuring price stability — has been unwilling to address the problem.
In recent months, the Fed has finally started raising short-term interest rates, an essential step toward stabilizing prices. But its own projections show that a much stronger response will be needed to bring inflation down to a more normal range.
Rising prices are clear to anyone who visits the gas station or grocery store. According to the Bureau of Labor Statistics, foods (meats, poultry, fish and eggs)are 14.2 percent more expensive than a year ago. Prices for other items like housing (shelter) and clothing (apparel) are up by 5 percent or more, and gasoline prices are up by a whopping 48.7 percent!
These are not isolated incidents. The prices of American consumer goods have been rising across the board. The consumer price index, for example, has risen 8.6 percent over the last year, the biggest increase since 1981.
In the early phase of recovery from the coronavirus pandemic, rising prices might have been blamed on problems in manufacturing and production. In response to the pandemic, many states closed their economies for a few months or, in some cases, much longer. As the economy began to rebound, shortages of automotive computer chips and production materials choked up prices and held back production.