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Surge in Inflation Reaches Peak Levels Since 1982

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Surge in Inflation Reaches Peak Levels Since 1982

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A recently published report by the Bureau of Labor Statistics confirms that the annual consumer price inflation has surged to levels not witnessed since 1982. Based on the latest consumer price index data from the previous month, tracking the inflation status via the costs of specific recurring purchases and essential items, consumer prices experienced a significant 7% increase from December 2020 to December 2021.

Although this statistic raises concern, it falls within the predicted range of economists and analysts closely monitoring the economic patterns during the COVID-19 crisis. Interestingly, the report led to a slight boost in overall stock values as it aligned with existing projections.

“The report showing a 7% rise in the December CPI over the past 12 months might be astounding for some investors given the unprecedented nature of this number,” commented Brian Price, the head of investment management at Commonwealth Financial Network, in a client communication. “However, this surge was largely anticipated by many, evident in the bond market reaction with declining long-term interest rates recorded this morning.”

To address the inflation spike, the Federal Reserve is expected to implement interest rate hikes and other strategic adjustments based on factors such as the job market condition.

“The latest CPI data only confirms what we already are aware of: Consumers are grappling with rising prices, influencing the Fed to adopt a more cautious stance. The uncertainty remains whether the Fed will quicken its pace considering the prolonged inflation, at least in the near term,” remarked Mike Loewengart, managing director for investment strategy at E-Trade, in a written statement. “With a continued uptick in Covid cases, the ramifications on the supply chain and labor shortages could endure, perpetuating the surge in prices.”

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