US inflation still shows no sign of fading

Annual US inflation hit 7% in December, its highest since 1982, while core inflation rose to 5.5%. That suggests high price rises are going nowhere soon.

Jerome Powell
Jerome Powell: will this current spike look more like 1946 or 1966?
(Image credit: © OLIVIER DOULIERY/AFP via Getty Images)

“Another month, another inflation report that causes the words ‘highest rate since’ to appear in headlines,” says Dominic Pino for National Review. Annual US inflation hit 7% in December, the highest level since 1982. Core inflation – which strips out volatile food and energy prices – rose to 5.5% compared with a year before, a sign that inflation remains “broad-based”. Month-on-month, consumer prices rose 0.5%, down from 0.8% in November and 0.9% in October. “That is a meaningful slowdown, but we aren’t out of the woods yet.”

US “policymakers have spent months waiting for inflation to fade”, say Jeanna Smialek and Ana Swanson in The New York Times. Instead, a shortage of workers caused by isolating due to Omicron and new lockdowns in China risk sending another wave of disruption through global supply chains. At 7%, inflation may finally be close to its peak, but it will “take time to ease back”, says Omair Sharif of research firm Inflation Insights. “It is likely to end 2022 lower, but still above the near-2% level that policymakers prefer.”

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More
Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.