CHICAGO (NewsNation) — As inflation reaches a new 40-year high in the United States, consumers are seeing the impacts of this on their wallets as prices for gas, groceries, and household goods soar.
According to the U.S. Department of Agriculture, the average family of four spent about $250 a month on groceries. That same family today would spend $271.13 for the same amount of groceries.
Food prices were nearly 9% higher than in March 2021, according to the USDA’s Consumer Price Index.
In January 2021, interest rates were at 1.4%. Since then, inflation has skyrocketed to 8.5%.
If consumers feel as though their money isn’t going as far as it used to, purchasing power data has shown that interest rates are to blame. That purchasing power means consumers aren’t able to buy as much as they used to.
So, how did we get here?
The White House, along with the Fed, initially portrayed the inflation surge as a temporary side effect caused by supply chain issues as the U.S. emerged from the pandemic. Republican lawmakers were fast to criticize Biden’s $1.9 trillion coronavirus relief package from last year as pumping too much money into the economy and causing more inflation. That narrative also has held some sway with leading economists, who say the financial support was excessive even though it helped the job market roar back.
Meanwhile, the administration has walked back its previous statements.
Treasury Secretary Janet Yellen told CNN on Tuesday evening that she did not fully understand the impact that unanticipated large shocks and supply bottlenecks would have on the economy.
“Look, I think I was wrong then about the path that inflation would take,” she said. “But we recognize that now the Federal Reserve is taking the steps that it needs to take. It’s up to them to decide what to do.”
Now, the Biden administration says the rising prices and inflation is its top domestic priority.
The Associated Press contributed to this report.