Inflation closed out 2021 on a high note, troubling news for the Biden White House and for economic policymakers as rapid price gains erode consumer confidence and cast a shadow of uncertainty over the economy’s future.

The Consumer Price Index climbed 7 percent in the year through December, and 5.5 percent after stripping out volatile prices such as food and fuel. The last time the main inflation index eclipsed 7 percent was 1982.

Policymakers have spent months waiting for inflation to fade, hoping supply chain problems might ease, allowing companies to catch up with booming consumer demand.

Instead, continued waves of virus have locked down factories, and shipping routes have struggled to work through extended backlogs as consumers continue to buy goods from overseas at a rapid clip. What will happen next might be the biggest economic policy question of 2022.

“Obviously 7 per cent is a pretty big sticker shock,” said Omair Sharif, founder of the research firm Inflation Insights. He thinks inflation could plateau around 7 percent.

NYTNS