US Inflation Might Have Hit a New 40-year High in January

(AP) With American consumers spending freely and many supply chains still snarled, year-over-year inflation may have notched yet another four-decade high in January.

The factors that have accelerated prices since last spring remain largely in place: Wages are rising at the fastest pace in at least 20 years. Ports and warehouses are overwhelmed, with hundreds of workers at the ports of Los Angeles and Long Beach, the nation’s busiest, out sick last month. Many products and parts remain in short supply as a result.

And reports indicate that the expiration of stimulus checks and other government aid has yet to slow Americans’ appetite for shopping.

Economists have forecast that when the Labor Department reports January’s inflation figures Thursday, it will show that consumer prices jumped 7.3% compared with 12 months ago, according to data provider FactSet. That would be up from a 7.1% year-over-year pace in December and would mark the biggest such increase since February 1982.

At the same time, other figures could suggest that the price increases have begun to slow. When measured from December to January, consumer inflation may have declined for a third straight month. Analysts have predicted that prices rose 0.4% from December to January, compared with 0.6% from November to December and 0.7% from October to November.

Still, the fastest year-over-year inflation in 40 years has wiped out the benefit of rising paychecks for most Americans, leaving them less able to afford food, gas, rent, child care and other necessities. Inflation has emerged as the biggest risk factor for the economy and a serious threat to President Joe Biden and congressional Democrats as midterm elections loom later this year.

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Story by CHRISTOPHER RUGABER for the Associated Press