When COVID-19’s first wave wiped out more than 20 million jobs in the United States last spring, and the country entered its worst recession. It was also the shortest recession in history, and a government stimulus package of around US$6 trillion saw nest-feathering becoming the new favourite pastime of Americans locked down and with no place to be but home.
Consumer spending on goods was nearly 26% higher in August 2021 than in January 2019, and the supply available was nowhere near enough to meet this new level of demand. Ongoing lockdowns in Asia, labour shortages and almost no contingency plans for trade disruption triggered by a global pandemic meant that producers were unable to ship enough goods to fill shoppers’ carts.
The imbalance triggered a price hike that started with a slow burn in late 2020 and was a full-blown fire by mid-2021. The US consumer price index grew by 1.7% in February, and by May, had jumped a whopping 5%. In the biggest 12-month jump since 1990, consumer prices rose 6.2% in October from the same period the previous year.
Inflation seems to be as contagious as the Omicron variant, affecting almost every sector of the US economy, from energy to used cars, food and apparel. Here’s the breakdown:
Electricity and utilities are up 30% this year, gasoline by the gallon costs 49.6% more than a year ago and fuel oil increased 59.1% for the year, which will likely affect heating costs over the winter season.
The price of used cars and trucks jumped 26.4% over the past year, an increase that was likely sparked by the global semiconductor chip shortage brought on by the pandemic.
The overall food index rose 5.3% in the past year, with meat and protein the worst affected. The category for meats, fish, poultry and eggs rose 11.9%, beef was up 20.1% and pork 14.1%.
The non-negotiable cost of keeping a roof over one’s head increased 3.5% over the year.
While the US inflation situation paints a dire picture, the nation shouldn’t be singled out. The pandemic aftershocks are being felt globally.
The 19-member eurozone soared to 4.9% in November, the highest level since records began in 1997. France’s 3.4% inflation increase was its highest in a decade, and skyrocketing prices in Germany took the inflation rate to 6% - its highest since 1992.
A 27.4% rise in energy prices in November from a year earlier was the biggest driver of inflation in the bloc’s 19 countries, and prices of food, services and goods all rose faster than the European Central Bank’s 2 per cent target.