US inflation rate highest since 1982

US inflation rose by 7pc in December, the fastest annual rate since 1982, as surging consumer demand outpaced overburdened supply chains.

The consumer price index topped the previous month's annualized 6.8pc rate, the Bureau of Labor Statistics said. Prices rose from the prior month by 0.5pc in December on a seasonally adjusted basis, easing from a 0.8pc gain in November.

Prices excluding food and energy — so called core inflation — rose by 5.5pc from a year earlier, the biggest increase since 1991. The energy index rose by 29pc and the food index rose by 6.3pc.

The Federal Reserve has signaled three possible hikes to its benchmark interest rate beginning as early as March, after it completely winds down its enhanced bond buying program. Asset manager Emles Advisors said today's report had "little chance of derailing" the Fed's likely course.

On a month-over-month basis, the energy index fell by 0.4pc in December, the first drop since April, as indexes for gasoline and natural gas both declined. The energy index had risen by 3.5pc in November following a monthly gain of 4.8pc in October.

Core inflation rose by 0.6pc on the month, following a 0.5pc gain in November.

Prices of new vehicles rose from the prior month by 1pc following a 1.1pc gain in November. They were up almost 12pc on the year, largely reflecting shortages of semiconductors, while prices of used vehicles were up by 37pc from a year earlier.

By Robert Willis