The hottest inflation in nearly four decades is inflicting financial pain on millions of U.S. households as prices for everyday necessities like food and gasoline continue to surge, according to a new Gallup survey.
The price spike has caused some degree of financial hardship for about 49% of Americans, according to the poll of 811 people conducted between Jan. 3 and Jan. 16. Roughly 9% of respondents said that inflation is causing "severe" hardship that has made it difficult to maintain their standard of living, while 40% described it as "moderate" financial pain. That's an uptick from November, when 45% of Americans said inflation was hurting their wallets.
The effect is more pronounced among lower-income families: Two-thirds of those making less than $40,000 a year say they experienced hardship compared with 56% of middle-income families and 32% of those earning more than $100,000 a year. What's more, 20% of Americans who are considered lower-income said the hardship they are experiencing is severe and hindering their ability to maintain their current standard of living.
Inflation jumped at its fastest pace in nearly 40 years last month, a 7% increase from the year-ago period, the Labor Department said recently.
The rise in prices has been bad news for President Biden, who has seen his approval rating plunge as consumer prices rose. The White House has blamed the price spike on supply-chain bottlenecks and other pandemic-induced disruptions in the economy, while Republicans have pinned it on the president's massive spending agenda.
Price increases were widespread.
Although energy prices fell 1.1% in December from the previous month, they're still up 29.3% from last year. Gasoline, on average, costs 49.6% more than it did last year. Food prices have also climbed 6.3% higher over the year, while used car and truck prices – a major component of the inflation increase – are up 37.3%. Shelter costs, which make up nearly one-third of the total increase, jumped 0.4% for the month and 4.1% year over year, the fastest pace since February 2007.
The typical U.S. worker is actually worse off today than they were a year ago, even though nominal wages are rising at the fastest pace in years: Average hourly earnings for all employees decreased 2.4% in December from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings increased by just 0.1% in December, when factoring in the 0.5% inflation spike.
The poll shows that Americans think inflation will get worse before it begins to improve, with nearly eight in 10 survey respondents predicting that prices will continue to rise this year, with more than 50% expecting it to go up "a lot."
"In the past, Americans have always been more likely to say inflation will increase rather than decrease, but the current expectation is higher than usual -- in fact, it is the highest Gallup has measured in its trend," the survey said. The previous high was recorded in September 2005, when 76% of Americans predicted higher inflation.