WASHINGTON — Strong consumer demand, continuing supply chain troubles and the emergence of the omicron variant of the coronavirus threaten to prolong sharply rising prices well into 2022, potentially making inflation the premier economic challenge of the new year.

Prices defied many economists’ expectations in 2021 by rising at the fastest pace in nearly 40 years. Everything from rent to the price of used cars to groceries climbed higher as the nation’s economy has recovered from the pandemic.

That caused pain for consumers – eating into sizable wage gains. It also caused headaches for the Federal Reserve, which had forecast much less inflation, and the White House, which faced concerns even from some Democrats about whether plans for more federal spending would drive inflation higher still.

Now, companies and economists are bracing for inflation continuing into the new year.

Citing the higher costs of ingredients, transportation logjams, labor shortages and higher wages, many food manufacturers announced price increases for 2022. Rents are locking in at higher prices as the broader housing market soars. Vehicle production, still strapped by the global microchip shortage, means prices for new and used cars aren’t settling down soon.

“Regardless of how you look at it, inflation is going to be with us for a good period of time,” said Joe Brusuelas, chief economist at RSM, a global accounting and finance firm.

Whether higher prices settle down within a few months will prove a key test economically and politically. If inflation doesn’t calm down, the Fed’s plan for a gradual withdrawal of economic support – including three interest rate hikes, perhaps as early as spring – may look inadequate or operate with a lag. And the White House will be looking at a midterms campaign in which Republicans are primed to pounce on inflation.

The beginning of the year is unlikely to bring much relief.

After a punishing year of food price increases for consumers, 2022 is unlikely to look much better. Snack giant Mondelez – with Oreos, Ritz and Chips Ahoy among its brands – said it is planning a 6 percent to 7 percent U.S. price increase in January. The company’s chief executive, Dirk Van de Put, said in a statement that demand for products remains high and that it expects “elevated inflation and logistics volatility to persist.”

Kraft Heinz Co., General Mills and Campbell Soup Co. have also announced imminent price increases for many of their products.

Price increases will hit all parts of the grocery store but will vary by category – the cost of items in bottles and cans will continue to rise due to the limited availability of the containers themselves. The price of seafood will probably continue to rise because so much of it is imported via air and ship, and pasta prices may surge due to the weakest durum wheat harvest since the 1960s.

Scott Bennett, director of congressional relations at the American Farm Bureau Federation, predicted beef prices may be one area that sees some amelioration in 2022, largely because at some point prices get so high that consumers turn to other proteins.

“It’s concerning to see the price of beef at the grocery store,” he said. “At what point does it get that beef just isn’t sold because the rent’s too high? Beef competes with poultry and pork.”

For much of 2021, White House and Federal Reserve officials said inflation would be “transitory,” or temporary, and limited to pockets of the economy hit hard by the pandemic. But over time, that prediction did not align with what was unfolding and the ways households were feeling the strain.

Broad-based price increases seeped into just about every sector. In November, prices rose at the fastest pace in nearly four decades, increasing 6.8 percent over the same period one year ago. Indexes for gasoline, shelter, food, used cars and trucks and new vehicles were among the larger contributors. It’s unclear whether any of those are poised for an immediate turnaround.

Rent, for example, was up 3 percent in November compared with last year, in part because of soaring home prices and supply chain issues limiting construction of new homes. Economists are especially focused on shelter costs, because rent and home prices make up large shares of household budgets and aren’t expected to ease even after global supply chain snarls clear up.

Michelle Krebs, executive analyst at Cox Automotive, expects that demand for vehicles will stay strong, even as supply is continuously constrained by the global microchip shortage.

“There are signs of production stabilizing. But we expect inventory to continue to be very tight, as it will take time to refill the pipeline,” Krebs said of new vehicles, which in turn trickle down to the used-car market. “As a result, prices will stay high.”

The White House, for its part, says it is taking steps to lower everyday expenses. Officials say President Joe Biden’s safety-net and infrastructure plan would bring down costs for working-class families, including for housing, health care, groceries, gasoline, elder care, child care and education.

In November, Biden announced he was tapping U.S. oil reserves to create more supply and push down prices. The White House had also called on the Federal Trade Commission to investigate whether oil companies were improperly raising prices.

“The President understands how higher prices can impact a family’s budget so he’s not wasting any time in using every tool at his disposal to help ease the burden of inflation for regular Americans,” White House spokesman Michael Gwin said in a statement. “That includes addressing bottlenecks in our supply chain – which are already moving record amounts of goods – holding big corporations accountable when they jack up prices on working families, and by offering relief at the pump through the largest-ever release of our strategic oil reserve to help lower gas prices.”

Still, the Fed has chief authority over inflation. Its main policy tool is setting interest rates, which it can raise or lower depending on whether it wants to cool or boost the economy. That tool, however, has broad influence over the economy and cannot, for example, target struggling industries, mend a broken supply chain or end a pandemic.

The Fed slashed rates to near zero after the coronavirus pandemic was declared, and Fed leaders have long said that they won’t raise rates to combat inflation until the labor market has recovered. Now, as the labor market has made a tremendous recovery by many measures, the Fed is making its strongest moves yet toward tackling inflation.

Earlier this month, Fed officials moved up the timeline for what could be as many as three interest rate hikes next year. The expectation is that those rate hikes could come sometime in the spring, after the Fed fully draws down its other coronavirus supports for the financial system in March.

Central bankers expect inflation will fall to 2.6 percent by the end of 2022 and 2.3 percent by the end of 2023, according to projections released at the Fed’s policy meeting in December. At a news conference after the meeting, Federal Reserve Chair Jerome Powell said forecasters hold the broad expectation that inflation will come down “significantly toward the back end of next year.”

“I would say, though, as well, that our policy should begin to have an effect,” Powell added. “There will be a lag, but it should begin to have an effect on that as well.”

Yet some economists are skeptical that prices will turn around so abruptly, and in so many sectors, that overall inflation will come down that much. Even if there are signs that supply chain backlogs will ease and the economy will continue to grow, prices would have to normalize precipitously for inflation to drop closer to the Fed’s 2 percent target by this time next year.

“Between wages and shelter, we haven’t seen the worst of inflation, even if energy prices moderate, even if supply chain issues start to resolve themselves,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “I still think we’re in for several months where prices are growing faster than what we’ve seen.”

Powell has long said ending the pandemic is the most surefire way to stabilize the economy; his remarks came just at the start of a coronavirus surge fueled by the omicron variant. In recent weeks, a wave of coronavirus cases has triggered closures at restaurants, entertainment venues, retailers, schools and offices, in part due to outbreaks and possible exposures among staff.

For consumer packaged goods companies, the unknowns associated with the omicron variant and this new wave of the pandemic add more uncertainty about when supply chain snarls will abate.

“Our manufacturers have been working since Day One of the pandemic, but we don’t know what we don’t know yet,” said Betsy Booren, senior vice president of regulatory affairs for the Consumer Brands Association, an industry group. “We’ve learned a lot in year. We’re trying to prepare for every pitch coming at us, but we don’t know what type of pitch it’s going to be.”

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