Consumer prices jump 7.5% over last 12 months, marking fastest pace in 40 years

The prices Americans pay for a basket of goods and services continued to climb rapidly last month, according to new government data.

The consumer price index -- a key measure of inflation -- surged 7.5% over the last 12 months, the Labor Department said Thursday. This marks the largest 12-month increase since February 1982. The index surged 0.6% in January alone.

The so-called core index, or measure for all items except the more volatile food and energy indices, spiked 6% over the last 12 months. It was the largest 12-month change since August 1982.

The food index, meanwhile, increased 7% over the last year and the energy index soared by 27%.

The rising costs are evaporating Americans' pandemic savings and eating into pay raises, hitting those with limited means the hardest. The Federal Reserve indicated last month that it is prepared to raise interest rates faster than originally planned to respond to the climbing prices and help ameliorate inflation.

President Joe Biden reacted to the report in a statement Thursday, acknowledging it as "a reminder that Americans' budgets are being stretched in ways that create real stress at the kitchen table" but touting "signs that we will make it through this challenge."

"While today’s report is elevated, forecasters continue to project inflation easing substantially by the end of 2022," the president said. "And fortunately we saw positive real wage growth last month, and moderation in auto prices, which have made up about a quarter of headline inflation over the last year."

Biden pledged that his administration "will continue to be all hands on deck to win this fight."

Increases in the indexes for food, electricity and shelter were the largest contributors to the overall price increases last month, the DOL data indicates. The food index rose 0.9% in January, building on a 0.5% spike in December. The electricity index climbed 4.2% last month and the shelter index rose 0.3% -- with the rent index climbing 0.5% and the owners' equivalent rent index up 0.4%.

The gasoline index, meanwhile, fell 0.8% in January after rapid rises in late 2021. Despite the decline in January, the gasoline index has soared 40% over the last 12 months.

Skyrocketing inflation has thrown a wrench into policymakers' plans for a post-pandemic economic recovery. Beleaguered supply chains are still struggling to keep up with consumer demand as the health crisis wanes, pushing prices upward at an alarming pace. The Fed has also reversed course on previous assurances that the price hikes would be temporary, but signaled it is watching the situation closely and prepared to take action soon if needed. Meanwhile, Americans are feeling the pinch at the grocery store, gas pump and more.