The US’s January inflation report shows that the economy has ironed out some pandemic disruptions—but is still very much mired in others.
Inflation climbed 0.6% on the month on the back of price increases for food, electricity, and shelter. The annual inflation rate was 7.5%, the highest in nearly 40 years.
Still, some economists say January’s inflation report shows signs that supply chains upended by covid-19 are on the mend. “We expected that the highest shopping season of the year globally from Christmas to the Lunar New Year would mean that more consumer demand was going to keep inflation rising at this stage, but we’re seeing it level off,” said Lauren Melodia, deputy director of macroeconomic analysis at the Roosevelt Institute.
Car prices are cooling off
For example, prices for rental cars, which skyrocketed in the spring and summer of 2021 as newly vaccinated consumers started to feel more free to travel and cars got more expensive with semiconductor shortages, dropped by by 7% in January after falling 2.7% in the prior month.
Prices for used cars also moderated, increasing by only 1.5% in January versus a 3.3% rise in December; prices for new cars stayed flat.
Meanwhile, prices for men’s suits, which collapsed at the start of the pandemic, are going back up as more workers return to the office.
Housing prices are still high
Some items, though, are still on the pandemic roller coaster. Airline tickets have bounced up and down along with the number of covid cases, and remained pretty high this holiday season.
Prices for housing are still under the effects of the pandemic, too. The booming housing market, combined with the slowdown in home construction due to material shortages, continues to push rent prices up.