Inflation rate likely spiked to another record high in December
Inflation likely spiked 7.0% in December from a year ago
Stock market plunges ahead of inflation data
Former Forbes Chairman and editor-in-chief Steve Forbes on the market selloff, inflation, the Federal Reserve and Manhattan DA Alvin Bragg defending a soft-on-crime approach.
The newest inflation data out this week is expected to show another jaw-dropping figure as the price for a bevy of everyday consumer goods soared higher.
The Labor Department is releasing the highly anticipated consumer price index on Wednesday morning, providing a fresh look at just how hot inflation ran in December. Economists expect the gauge – which measures goods ranging from gasoline and health care to groceries and rents – to show that prices surged 7.0% in December from the year-ago period, toppling the previous month's 39-year high of 6.8%. On a month-to-month basis, economists forecast the index would rise by 0.8%.
FED DOUBLES TAPER RATE, EYES THREE INTEREST RATE HIKES IN 2022
It would be the fastest increase in consumer prices since June 1982, when they rose 7.1%.
A shopper walks through the aisles of the Dollar Tree store in Alhambra, California, on Dec. 10, 2021. (Getty Images / Getty Images)
Rising inflation is eating away at strong gains and wages and salaries that American workers have seen in recent months – bad news for President Biden, who has seen his approval rating plunge as consumer prices rose. The White House has blamed the price spike on supply-chain bottlenecks and other pandemic-induced disruptions in the economy, while Republicans have pinned it on the president's massive spending agenda.
The reading will also have major implications for the Federal Reserve: Chairman Jerome Powell has already signaled the U.S. central bank plans to speed up its withdrawal of support for the U.S. economy in order to combat inflation, which has been higher and longer-lasting than policymakers initially expected.
"Inflation readings will keep the pressure on the Federal Reserve to begin hiking interest rates as soon as March, but the unknown economic toll from the omicron variant may yet alter the timing or frequency of interest rate increases," said Greg McBride, chief financial analyst at Bankrate.
Hawkish minutes released last week from the Fed's December meeting showed that officials discussed the possibility of a faster interest rate hike as the inflation burst forces them to readjust policy.
Federal Reserve Board Chairman Jerome Powell is sworn in during a confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee on Jan. 11, 2022, in Washington, D.C. (Getty Images / Getty Images)
"It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated," the minutes said.
The Fed began tapering its bond purchases in November by $15 billion a month, and announced during its December meeting that it would double that to $30 billion beginning in January. Under that timeframe, the central bank is poised to conclude the program by March, allowing Fed officials to begin hiking interest rates and reducing the $8.8 trillion balance sheet.
CLICK HERE TO READ MORE ON FOX BUSINESS
Powell told lawmakers on Tuesday while testifying on Capitol Hill for his re-confirmation hearing that he expects inflation to subside by the middle of the year, but that the Fed needs to take whatever actions are needed to prevent higher prices from becoming "entrenched."
"We are going to have to be humble but a bit nimble," he said before the Senate Banking Committee.