The US Inflation Landscape

(January 26, 2022) According to the U.S. Bureau of Labor Statistics (BLS), in December 2021 consumer price inflation in the U.S. accelerated to 7.0% year-over-year — the fastest pace of growth since 1982. And this is not just because of high prices on gasoline and and passenger cars. BLS data shows that prices increased across a wide range of consumer goods and services.

To estimate the "spread" of inflation across the U.S. consumer market, we employed the BLS CPI inflation data for 80 representative expenditure categories — from motor fuels, tires, apparel, and bakery products to newspapers and magazines and veterinary services for pets — and compared the first and the last months of 2021.

• The comparison shows that the number of expenditure categories where price growth is below 2.0% year-over-year decreased from 40 (50% of the categories analyzed) in Jan. 2021 to 18 (22.5%) in Dec. 2021.
• In December, there were 11 expenditure categories where price growth exceeded 10% year-over-year, including fuel and cars but also meat, furniture and home equipment, and lodging away from home. For 45 categories, the price growth exceeded 4%. In the previous January, on the other hand, there were only 16 categories where prices grew more than 4% year-over-year, and no categories that recorded price growth above 10%.
  
• The median inflation rate (which splits the number of expenditure categories equally) for the 80-category sample increased from 2.0% to 4.4% between January and December last year, underlining that inflation has not only increased as a whole, but spread to more consumer goods and services.

The spread of inflation across more and more expenditure categories may indicate unfolding cost-push inflation — when an increase in prices for raw materials and intermediates as well as demand for high wages translates into higher consumer prices.