Price inflation is expected to pop again as policymakers await an elusive peak.

Inflation closed out 2021 on a high note, bad news for the Biden White House and for economic policymakers, as rapid price gains erode consumer confidence and cast a shadow of uncertainty over the economy’s future.

The Consumer Price Index most likely climbed 7 percent in the year through December, and 5.4 percent after volatile prices such as food and fuel are stripped out, economists in a Bloomberg survey estimated. The last time the main inflation index eclipsed 7 percent was 1982.

What to Know About Inflation in the U.S.

  • Inflation, Explained: What is inflation, why is it up and whom does it hurt? We answered some common questions.
  • The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.
  • Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.
  • Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.
  • The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.

Policymakers have spent months waiting for inflation to fade, hoping that supply chains would catch up with booming consumer demand. Instead, continued waves of coronavirus infections have locked down factories, and shipping routes have struggled to work through extended backlogs as consumers continue to buy goods from overseas at a rapid clip. What happens next may be the biggest economic policy question of 2022.

Inflation F.A.Q.

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What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation costs and toys.

What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.

Where is inflation headed? Officials say they do not yet see evidence that rapid inflation is turning into a permanent feature of the economic landscape, even as prices rise very quickly. There are plenty of reasons to believe the price burst will fade, but some concerning signs suggest it could last.

Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains could also lead to higher wages and job growth.

How does inflation affect the poor? Inflation can be especially hard to shoulder for poor households because they spend a bigger chunk of their budgets on necessities — food, housing and especially gas.

Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.

Here is what to watch when fresh C.P.I. data are released on Wednesday at 8:30 a.m.:

  • Used cars. Prices for used cars and trucks have been a big factor in recent inflation, and that most likely continued in December. Wholesale vehicle prices continued to climb in December, according to a closely watched index. Cars are expensive because manufacturers have been struggling to get their hands on parts, and particularly computer chips imported from Asia. Recent lockdowns in China meant to contain the coronavirus could exacerbate the shortage, which has pumped up demand for used cars. When it comes to rising vehicle prices, “it’s not over yet,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities.

  • Groceries and gas. Economists and Wall Street analysts tend to focus on a measure of prices that strips out food and fuel costs, because those prices jump around a lot from month to month. But they matter a lot to households. While gas prices moderated somewhat in December, food has been growing steadily more expensive. The fact that high prices are taking a bite out of household budgets seems to be one of the reasons that consumer confidence has faltered — and gas and food tend to be the most salient costs for shoppers.

  • Rising rents. While inflation pressures were centered squarely on goods early in the pandemic, they have recently been creeping into services — and, importantly, into rents. Housing costs make up about a third of the Consumer Price Index, so the fact that landlords are charging more matters a lot for overall inflation.

  • Supply chain kinks. The Federal Reserve is pulling back its support for the economy, which should make borrowing money to buy a car or house more expensive and slow demand, weighing on inflation. But the supply side is more of a wild card: It is unclear when businesses will be able to produce and transport enough goods and services to work through backlogs and stem shortages. There are early signs that snarls in the shipping routes and depleted inventories may be moderating, but other signals suggest that a return to normal will take time.

    “You always see a few snowflakes, but it doesn’t amount to a storm yet,” Jerome H. Powell, the Fed chair, said of signs that kinks in the supply chain are resolving themselves, during Senate testimony on Tuesday.

  • The likely takeaway. Just about everyone expects inflation to fade somewhat as the economy moves into 2022. Even with Wednesday’s fresh data, though, it is going to remain tough to guess how soon — and how quickly.

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