U.S. inflation rate soars to another 40-year high of 7.5%

The U.S. inflation rate rose to the eye popping level of 7.5 per cent in January, its highest level since 1982.

The Bureau of Labour Statistics said in a release Thursday that the country's consumer price index was 7.5 per cent higher in January than it was in the same month a year earlier.

The index rose by 0.6 per cent in January alone, just from December's level.

Food, electricity, and shelter were the biggest factors driving up the cost of living. But even if volatile items like food and energy are stripped out, the index still rose by 6 per cent. The highest level for the so called core rate in 40 years.

Economists had been expecting the rate to rise to a new multi-decade high, but the 7.5 per cent figure was even higher than they were anticipating.

"Price pressures appear to be broadening out, and markets are reacting swiftly by incorporating a more aggressive rate hiking path," Desjardins economist Royce Mendes said of the data.

Central banks are expected to imminently start to hike their record low interest rates as a way of reining in inflation. Investors are now anticipating the U.S. Federal Reserve could hike its interest rate as much as six times this year.

"With inflation continuing to surprise to the upside, the pace of rate hikes is likely to be faster than expected a few months ago," TD Bank economist Leslie Preston said.

The U.S. is not the only country dealing with record high inflation right now. Supply and demand imbalances, coupled with unprecedented amounts of stimulus spending have caused prices for goods and services to skyrocket just about everywhere. Canada's inflation rate is currently at a 30 year high and it, too, is forecast to go higher.

"For other jurisdictions such as Canada, the data suggest that inflation could breach the 5 per cent threshold next week," Mendes said.