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Supermarket in New York (January 5th): Groceries are one of the goods that have become significantly more expensive in the United States.
Photo: Richard B. Levine / IMAGO
The upward trend in prices in the USA accelerated further from a high level in December.
The US Department of Labor announced that consumer prices rose 7.0 percent from the same month last year.
This is the highest inflation rate since 1982. The rate is thus even more clearly than the US Federal Reserve's (Fed) inflation target of two percent.
Compared to the previous month of November, consumer prices rose by 0.5 percent.
As in Germany, the prices for food and gasoline have risen noticeably.
Due to the rapid and sustained rise in inflation, the Fed has already initiated the U-turn in its monetary policy - away from the economic support measures of the corona crisis and towards reducing aid.
The billion dollar bond purchases by the central bank, for example, which provide the markets with additional liquidity, will be discontinued by March.
According to many experts, given the robust development of the labor market and the high growth, the central bank could then raise the key rate again at its meeting in March for the first time since the pandemic.
It is currently still in the extremely low range of 0.0 to 0.25 percent.
According to the central bank's latest forecast from December, there could be up to three interest rate hikes in 2022.
The Fed can curb inflation by increasing the key interest rate, but at the same time the economy will also suffer from the tighter monetary policy.
Problem for Joe Biden too
"If this high level of inflation takes hold in the economy and in people's minds, then it will inevitably lead to a much tighter monetary policy on our part, which could lead to a recession," warned Federal Reserve Chairman Jerome Powell on Tuesday in the US Senate.
"That would be bad for workers," he added.
The Fed is committed to the goals of price stability and full employment.
The high inflation rate ten months before the congressional election is also a problem for US President Joe Biden and his Democrats.
There is a simple rule of thumb: the higher the prices, the more dissatisfied the voters are and the more Biden's poll numbers drop.
The government is trying to curb the rise in the rate of inflation with various initiatives - but they are limited in scope.
fdi / dpa
