The latest numbers show inflation rising to a nearly 40-year high, gouging a hole in American pocketbooks as the cost of living keeps going higher and higher. Consumer inflation jumped in December at its fastest year-over-year pace in nearly four decades, surging 7%.
While unemployment numbers are dropping and wages are rising due to rapid growth in the economy, those positive trends are also driving record price increases.
"We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation," Federal Reserve Chairman Jerome Powell told lawmakers during his Senate confirmation hearing this week.
Some of the biggest increases over the last year include gasoline, up 60%, followed by used vehicles up more than 37% (compared with a year ago), and food like meats, fish, and eggs up 12.8%.
Powell, seeking a second term as Federal Reserve Chairman, says the Fed is committed to a strong labor market, which can't happen without price stability.
"In a way, high inflation is a severe threat to the achievement of maximum employment and to achieving a long expansion that can give us that," Powell said.
He announced the Fed intends to raise interest rates during 2022 in an effort to control inflation.
Economist Joel Griffith, with the Heritage Foundation, says that while this is a necessary step, there are other factors that need to be addressed.
"We've had over the past year and a half government suppressing supply, think about all the COVID restrictions... at the same time you've had the Federal Reserve printing a lot of money, you've had the federal government spending a lot of those resources and that's driven up demand, and that is the perfect recipe for rising prices," Griffith told CBN News.
While he expects supply chain issues to resolve themselves, Griffith adds that if the government can't get its spending under control, things may get better, but inflation will remain elevated long into the future.