WASHINGTON (Reuters] – U.S. Consumer Spending fell in December suggesting that the economy has lost its speed going into 2012. This is due to snarled supply chains, raging COVID-19 infections and an increase in annual inflation last seen in early 1980s.

On Friday, the Commerce Department reported that consumer spending, which account for nearly two-thirds U.S. economic activities, declined 0.6% after increasing 0.4% last November. Reuters polled economists and forecast that consumer spending would fall 0.6%.

These data were included in Thursday’s fourth quarter advance gross domestic products report. Last quarter saw an increase of 6.9% in annualized growth, which was faster than the 2.3% rate recorded for July-September.

The result was a 5.7% increase in growth for 2021, the largest since 1984. In 2020, the economy shrank by 3.4%

People spent less, probably because they started their holiday shopping in September, fearing empty shelves due to a lack of goods. The Omicron variant of coronavirus, which is causing skyrocketing infections in the US, also caused a drop in traffic to bars and restaurants as well as other places with high contact.

Last month’s inflation was exacerbated by supply chain strains and shortages. After rising 0.6% in November, the personal consumption expenditures price index (PCE), increased 0.4%. The PCE price indicator increased 5.8% over the 12-month period ending December. The increase was the greatest since 1982, and it followed a 5.7% annual growth in November.

After a 0.5% increase in November, which did not include volatile food or energy components the PCE price Index rose 0.5%. In December, the so-called core PCE index saw a 4.9% increase year-on-year. This is the largest rise in price since 1983. Through November, the core PCE index rose 4.7% over 12 months.

The Federal Reserve’s flexible target of 2% inflation is being exceeded by the inflation rate. The Fed said Wednesday that they were likely to raise interest rates during March.