Inflation makes biggest jump in 40 years

A 7% spike in inflation last year is the biggest jump in 40 years, according to data released Wednesday by the U.S. Department of Labor, as detailed in a report from the Associated Press.

The rise in prices has wiped out the pay increases that many Americans have been receiving, making it harder for households, especially lower-income families, to afford basic expenses.

The Department of Labor says mismatched supply and demand still is a significant portion of inflationary pressure. For example, used car prices have increased more than 37% over the past year because new car production has been restrained by shortages of semiconductors.

Federal Reserve officials have indicated the Fed is prepared to accelerate planned interest rate hikes to fight high inflation, and the rate hikes could begin as early as mid-March.