A key inflation measure rose to a 39-year high last month

Consumer price inflation rose by 6.8% without seasonal adjustments over the 12 months ending in November, the Bureau of Labor Statistics reported on December 10.

Prices for everything from gas to groceries are on the rise.

The inflation rate is the highest it has been in decades.

Many Michiganders are feeling the pinch as high prices eat away their earnings.

“It is of great concern that our inflation for 2021 literally is the highest in roughly 40 years,” said Timothy Nash, director of the McNair Center at Northwood University.

Nash said it has been a while since inflation across the country has risen this much in one year. He said the federal reserve is putting too much money into the economy. That along with supply chain issues and the ongoing pandemic all contributed to high inflation, according to the U.S. Bureau of Labor Statistics.

From December 2020 to December 2021, the consumer price index rose 6 percent, the largest December to December change since 1981. The cost for food at home increased 6.5 percent. 2008 was the last time the over-the-year increase in this category was that high.

Prices for many items were higher than 7 percent during this time period, including gas which was 49 percent, used care and trucks at 37 percent, energy at 29 percent, and meats, poultry, fish and eggs at 12 percent.

Nash said with higher costs, people aren’t spending as much. He cited the latest numbers by the federal government that say retail sales in December were down 2 percent.

“Consumers clearly were buying less at Christmas. Some of them, I’m sure, bought in advance. But a lot were saying, ‘hey, I’m going to buy less. You know, inflation is eating into our income and we’ve got to buy less,’” Nash said.

Nash thinks inflation will stick around for most of this year. He warns prices could climb even higher given the rise of the producer price index, which is up 9 percent from 2021.

“Those producers, to stay even or make a profit, are going to pass those higher costs on to consumers,” Nash said.

Nash is optimistic supply chain issues, and the pandemic will both improve this year, pushing inflation to as low as 4.5 percent when we look back at 2022.

“It’ll be down. But it will be much higher than the average of just over 2 percent we’ve had for the last decade,” Nash said.

Copyright 2022 WNEM. All rights reserved.

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