8 Numbers You Need To Know About Inflation

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You’ve certainly heard about the historic inflation of 2021 and how policymakers are taking steps to curb rising costs in 2022. But higher prices from the grocery store to the gas pump are only one aspect of the crisis. Inflation does not exist in a vacuum, and when the rate of inflation rises or falls, everything from bond yields to auto loans is affected. Here are some key numbers that tell the story of inflation.

See: How To Protect Your Financial Future From the Effects of Inflation
Read: When Will Inflation End? (And What Can You Do in the Meantime?)

7%: The Rate of Inflation for 2021

In January, the country got the hard numbers behind the prior year’s rising prices when the Bureau of Labor Statistics released its December Consumer Price Index (CPI) report. The CPI — which tells economists about the rate of inflation by tracking changes in the price of consumer goods across the economy — showed that inflation rose at a rate of 7% between December 2020 and December 2021.

Economy Explained: Inflation’s Ups and Downs: How It Impacts Your Wallet

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1982: The Last Year Inflation Was This High

The last time inflation hit 7% was four decades ago in the summer of 1982, when Michael Jackson released “Thriller” and David Letterman made his late-night TV debut. That was the last year of what economists refer to as “The Great Inflation,” which lasted from 1965-1982 and served as “the defining macroeconomic period of the second half of the twentieth century,” according to the Federal Reserve. America’s central banking system also wrote that the moment “led economists to rethink the policies of the Fed and other central banks.”

In the News: Rising Inflation Is Causing Many Retirees To Worry About Their Nest Eggs

0.06%: The Average Savings Account APY

If you stuffed your money under your mattress at the beginning of 2021, that amount of cash would have been able to buy 7% less by New Year’s Eve. If you had kept it in the average savings account in America, your money would have done only six one-hundredths of a percent better. According to the Federal Reserve of St. Louis, 0.06% is the average yield for a savings account in the United States. It’s been stuck there since falling from 0.07% between April-May 2021.

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4: The Number of Times the Fed Will Likely Raise Interest Rates in 2022

Record-low interest rates helped keep the economy chugging along during the pandemic, but dirt-cheap money led to a borrowing bonanza that helped fan the flames of inflation. According to The New York Times, the Fed has indicated that it will smother inflation by raising interest rates throughout 2022.

There will probably be four rate increases at least, with the first almost certain to come in March at the organization’s next meeting. Those increases will make it more expensive for consumers to borrow money, as auto financing, mortgages and loans in general start to cost more as rates rise.

More: Why Inflation and the Supply Chain Could Bring More Volatility to Economic Recovery

100 Billion: The Number of Dollars the Fed Will Cut From Its Balance Sheets Every Month

One part of the Fed’s strategy for slowing down inflation is to raise interest rates. The other part of the plan is to slow the flow of money into the overheated economy by slashing its balance sheets. According to Reuters, the Fed’s portfolio nearly doubled to $9 trillion in less than two years during the pandemic. The growth had the desired effect of keeping borrowing rates low, but inflation was the consequence. The Fed has indicated it will now shed $100 billion per month in order to regain an economic balance, according to Investor’s Business Daily.

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4%: The Expected Inflation Rate for 2022

The Federal Reserve announced at its policy meeting in December that it expected inflation to fall to 2.6% by the end of 2022 — 2.3% by the end of 2023. With most experts predicting that 7% will be the peak of the crisis, the rate of inflation is expected to fall steadily throughout the year, averaging about 4% overall for 2022.

Advice: How To Beat Inflation at Costco and Other Grocery Stores

9.8%: The Percentage the Stock Market Fell in January

On Jan. 3, the S&P 500 was at its all-time high. When it closed on Jan. 27, the benchmark index was at its lowest point since Oct. 4, losing 9.8% of its value in the first month of the year, according to S&P Global.

It was the stock market’s worst month since March 2020, and a lot of it has to do with inflation — or at least with the Fed’s strategy for managing it. Rising interest rates dampen stock market gains because they send yields up, which lures investors out of stocks for the safety of bonds. Rising interest rates also slow corporate expansion, cool off the economy, and make it harder for businesses to borrow money, all of which spells bad news for stock investors.

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58%: The Percentage of Workers Who Got a Raise Then Lost It to Inflation

A recurring storyline throughout this entire ordeal has been how inflation continuously finds a way to snag defeat from the jaws of victory — and the labor market is no exception.

According to Joblist’s 2022 Job Market Trends Report, 53% of workers got a raise in the last year, an incredible statistic that should have been a cause for celebration. The problem is that 58% of those who received raises saw pay bumps of 5% or less. Inflation rose by 7% from December 2020 to December 2021, which means that real wages actually fell for most workers despite their pay increases.

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