US inflation reaches 7.5 % in January, highest since February 1982

• CPI rises by 0.6 % monthly and 6 % on an annual basis, excluding food and energy

• Food prices accelerate 0.9 % in January and 7 % year on year

U.S inflation rise rapidly in January at its highest level in four-decade, as the economic recovery gathered traction and demand outpaced the supply of labor and commodities.

The consumer price index rose 0.6 % in January after rising 0.5 % in December, according to the Labor Department on Thursday. 

The CPI increased by a 7.5 % annual rate in January. This was the largest year-on-year gain since February 1982, and it came on the heels of a 7 % increase in December.

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The so-called core price index, which excludes food and energy, rose 0.6 percent in January, the same increase as in December while 6 % year on year. This was a substantial increase than the 5.5 % increase in December, and it was the highest rate in the last 40 years.

Dow Jones polled economists predicted that the metric will rise 7.2% year on year.

The increased demand for used cars has been encouraged by the price increase in new automobiles as a result of the worldwide semiconductor-chip shortage, which has pushed up the costs for the former. Used cars and truck prices are up 40.5 %, following a 1.5 % gain last month, contributing to growing inflation.

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The index of airline fares and personal care rose 2.3 % and 1 % respectively in January while education increased 0.2 %. 

The apparel index increased by 1.1 % in January after positioning at 1.7 % in December, while the index for new vehicles was unchanged over the month which was 1 %. 

Food prices jumped 0.9 % in January and 7 % year on year.

Shelter costs, which account for almost one-third of overall costs, climbed 0.3 % month over month and 4.4 % year over year. 

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In contrast, only a few indexes decreased in January; among those that did were lodging away from home 3.9 % and wireless telephone services 0.1 %.

Meanwhile, a separate report released on Thursday indicated that weekly unemployment claims totaled 223,000for the week ending Feb. 5, a 16,000 decrease from the previous week and fewer than the 230,000 projections. 

Picture Credits: Investopedia