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U.S. inflation rose in 2021 at quickest rate since 1982; Biden says there are positive signals

President Joe Biden, however, says that the report also shows "meaningful reduction in headline inflation."

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U.S. inflation rose in 2021 at quickest rate since 1982; Biden says there are positive signals
Traders work on the floor of the New York Stock Exchange on Wall Street in New York City. The Labor Department said in a report Wednesday that inflation in the U.S. grew at a historically quick rate for the 12 months ending in December. File Photo by John Angelillo/UPI | License Photo

Jan. 12 (UPI) -- Inflation in the United States has risen over the past year at a rate not seen in four decades, the Labor Department said on Wednesday -- underscoring one of Americans' chief economic concerns in the COVID-19 era.

The department said in its Consumer Prices Index that inflation was up 7% year-to-year in December. That's the fastest one-year increase since 1982. Energy prices rose 29.3% and food prices were up 6.3% in the same period.

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From November to December, inflation rose by a half-percent, the report said.

"Increases in the indexes for shelter and for used cars and trucks were the largest contributors," the report states.

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"The food index also contributed, although it increased less than in recent months, rising 0.5% in December. The energy index declined in December, ending a long series of increases; it fell 0.4% as the indexes for gasoline and natural gas both decreased."

When excluding food and energy prices, inflation was up 5.5% for the 12 months ending in December -- the quickest rate since 1991.

Prices for everything from clothing and new vehicles to medical care and furnishings also increased last month, the department said.

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U.S. markets moved slightly higher following the news as the Dow Jones Industrial Average rose 38.30 points, or 0.11%, the S&P 500 gained 0.28% and the Nasdaq Composite closed the day up 0.23%.

The 10-year treasury yield fell to 1.73% on Wednesday after rising above 1.8% earlier in the week.

Wells Fargo senior analyst Sarah House told The Wall Street Journal the "blistering pace of inflation" is driven by scarcity in the economy combined with the willingness and capacity to pay more for goods, services and labor.

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Federal Reserve Chairman Jerome Powell told Congress on Tuesday that supply chain issues should recede this year and help bring inflation down.

In responding to the inflation report, President Joe Biden said that it's important to understand a fuller depth of what the statistics show.

"Today's report -- which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling -- demonstrates that we are making progress in slowing the rate of price increases," he said in a statement. "At the same time, this report underscores that we still have more work to do.

"Inflation is a global challenge, appearing in virtually every developed nation as it emerges from the pandemic economic slump. America is fortunate that we have one of the fastest growing economies -- thanks in part to the American Rescue Plan -- which enables us to address price increases and maintain strong, sustainable economic growth. That is my goal and I am focused on reaching it every day."

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President Joe Biden announces how the Bipartisan Infrastructure Law will rebuild America's bridges in the South Court Auditorium of the Eisenhower Executive Office Building near the White House in Washington, D.C., on Friday. Photo by Ken Cedeno/UPI | License Photo

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