Inflation climbs to highest in 40 years
Inflation soared over the past year at its highest rate in four decades, hammering American consumers, wiping out pay raises and reinforcing the Federal Reserve's decision to begin raising borrowing rates across the economy.
The Labor Department said Thursday that consumer prices jumped 7.5% last month compared with a year earlier, the steepest year-over-year increase since February 1982. The acceleration of prices ranged across the economy, from food and furniture to apartment rents, airline fares and electricity.
When measured from December to January, inflation was 0.6%, the same as the previous month and more than economists had expected. Prices rose 0.7% from October to November and 0.9% from September to October.
Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation leaping in the past year. And there are few signs that it will slow significantly anytime soon.
Wages are rising at the fastest pace in at least 20 years, which can pressure companies to raise prices to cover higher labor costs. 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.
Small businesses raising prices as costs increase
A record share of U.S. small businesses raised their prices in January to combat high costs of materials and labor.
A net 61% of owners reported increasing average selling prices last month, the most in monthly data back to 1986, the National Federation of Independent Business said Tuesday. Inflation remains a top concern for small businesses, still cited by the greatest share of respondents since 1981.
“More small-business owners started the new year raising prices in an attempt to pass on higher inventory, supplies and labor costs,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Owners are also raising compensation at record high rates to attract qualified employees to their open positions.”
In another sign of inflationary pressures, a record 50% of companies said they boosted compensation amid difficulty attracting qualified talent.
The IRS has launched a revamped child tax credit website meant to steer people to free filing options for claiming the credit.
Filing tax returns necessary to claim child tax credit
The Biden administration wants families with children to know that there is roughly $193 billion waiting for them — all they need to do is file their taxes to claim it.
That estimated total is what remains of the expanded child tax credit, and the administration is concerned that some of those most in need of the assistance may be the least likely to get what is due to them.
President Joe Biden increased the payments and expanded who was eligible as part of his coronavirus relief package. While most families already received half of the credit as monthly payments last year, they'll lose out on the remaining balance unless they file their taxes.
Vice President Kamala Harris, Treasury Secretary Janet Yellen and White House senior adviser Gene Sperling staged a virtual event Tuesday to encourage people to send their tax forms to the IRS, including those whose incomes are so low that they might not have traditionally filed.
Families should go to childtaxcredit. gov to check their eligibility. The tax filing deadline is April 18.
The administration estimates that roughly 58 million households would qualify for the credit, which averages $3,300 and could be used to offset an existing tax bill or be paid out as a refund.