Cheddar News takes a deep look into rising prices across all sectors this year.

Taking a Deeper Look Into Rising Prices This Year

All right time now for a deep dive into what may be the biggest economic story of the year. One of the most important issues to American voters as well. We know, consumers hit hard by rising prices for just about everything in 2022. As price gains needled into every single sector of the markets, from food gas to energy, airline prices, digital assets and beyond. So we began to see the destabilizing of prices in february. When Russia somewhat surprisingly invaded Ukraine, The world's reliance on Russian oil put it into focus. And as Ukraine's allies started moving away from Russian oil, the lack of supply caused a crisis at the pumps as the average cost of a gallon of gas shot up and kept going up for months with no end in sight. So take a look at how gas prices have moved this year, starting a steady climb, hitting an all time national high of more than $5 a gallon in June. That caused ripple effects throughout the economy, pushing up shipping and airline prices and wreaking havoc on Americans, tightening budgets. Well since that June high though, gas prices cooling off to an average of $3.20 a gallon in part due to the Biden administration releasing the strategic oil reserves. Our next game, those food prices, you know that as the cost of food production and shipping continued to creep higher, grocery stores started upping their prices to reflect the price jumps and higher demand for groceries. As consumer shopping habits shifted from discretionary items to necessities like feeding your family and paying for beverages. There were other factors at play here, though, to the widespread avian flu that decimated poultry flocks, including Egg lane hence, and if we take a look at the biggest price increases for food items, the cost of eggs rising a whopping 50% from the same time last year, butter up 34% lettuce jumping at 20%. So the Federal Reserve, the US Central Bank watching as inflation ravaged the economy, running at its highest level in four decades and decided that after four years of rock bottom interest rates and easy money policies, something had to give. So the central bank, beginning its aggressive tightening campaign in March, starting with a quarter of a percentage rate rise, continuing to steadily increase them throughout the year. So take a look at what rates, where rates started the year, where they are now a pretty star jump in just less than 12 months. The federal funds rate. That is the rate that the Fed moves now, standing at between 4.25 and 4.5%. Thanks to what's been the most aggressive rate rising campaign that we've also seen in about four decades. Well, as inflation continued to rise to the second half of the year affect acknowledging that its aggressive interest rate hikes would bring some painted both businesses and households meaning a sustained period of silk growth, but that it was a necessary evil in order to restore price stability. So take a look at what Fed chair jerome Powell said after the Fed's most recent rate hike in december. We are seeing the effects on demand in the most interest sensitive sectors of the economy, such as housing. It will take time however, for the full effects of monetary restraint to be realized, especially on inflation, reducing inflation is likely to require a sustained period of below trend growth and some softening of labor market conditions. The rate hikes they've seeped into important sectors of the economy, not the least of which is consumer spending. We know this by now consumer spending fueling this us economy making up 70% of overall U. S. GDP growth while auto sales plummeting as these borrowing costs rose in the housing industry hit especially hard as sky high mortgage rates caused prospective homebuyers to rethink their moves, many decided to reinvest in their current home. Instead, the 30 year fixed mortgage rates sitting around 3.6% in december of last year. And since then it's nearly doubled. Currently sitting at about 6.5%. As the Fed has raised rates dramatically in 2022 the central banks started to come under fire from business leaders like Jamie Diamond and Kathy would consumers and economic analysts to here's what dan Gail. Trude managing partner at the financial consulting firm. Gail trading company had to say about the Fed's policy moves when enjoyed our program in september. Take a look, I'm not so sure why the Fed or the administration is not getting the memo here. This inflationary situation that we're in is supply driven and because it's supply driven, the Fed doesn't really have the tools to address that. So what they're addressing is the demand side. Now, as we're trying to bring down demand to put supply and demand in balance? Well, it's not working why? Because demand is still staying and yet we have so many problems in the supply chain, not just in the United States, but globally. We see interest rates going up around the world. So everybody is choosing to fight this problem in the same way, which is on the demand side. In my judgment, that's the wrong side of the equation. Okay, well, there have been some signs recently that inflation might be cooling, but it's still extremely high. And while the Fed has started to slow down, the pace of rate rises, the central bank signaling, it will continue its tightening campaign until supply and demand are more balanced. So likely we all anticipate continued rate rises in 2023 based on what the Fed has said