Good morning. Welcome to Axios today. It's Thursday, January 13th. I'm Nailibutu.

Here's what you need to know today. Schools are trying to cope with two few bus drivers.

Plus, Omacron and At-Home COVID tests. But first, today's one big thing. How the inflation

spike is affecting American wallets. Axios' chief financial correspondent and friend of the

podcast Felix Salmon told us last year not to worry about inflation. But new numbers show

prices rose faster within 2021 than they have in the last 40 years. Inflation hit 7% in December.

How do we put that number in context? We're not letting Felix off the hook, but he is on

book leave right now. So we have our other favorite inflation expert here to talk through it.

Axios' new chief economic correspondent, Neil Irwin. Hey, Neil.

Hi, Nailibut. Thanks for having me.

So I want to start by asking you what I've been asking Felix. Is it time for all of us to worry

about inflation now? I think we're past time of the moment to worry. If your wages have not been

rising 7%, and I think a lot of people have not had that kind of raise, you're talking about a

real deterioration in your quality of life and what you can afford. And that is cutting people's

living standards. It's causing a lot of pain out there. What particularly when we're looking at

prices, where are we seeing sort of the biggest increases when we're looking at just items?

The biggest most dramatic increase has been in car prices, especially used cars,

40% over the last year. So that's just insane. I mean, that never happens.

Neil, what do we need to know about what economists think will happen? Is there a light at the end

of the tunnel? Do people think prices inflation will ease off? So yes and no. The good news is that

there's reason to think that we won't see this kind of 7% inflation in 22, 23 going forward.

Because some of these adjustments are one-time things. That said, there are some things

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