(The Center Square) – Federal Reserve Chairman Jerome Powell told the U.S. Senate Banking Committee Tuesday that elevated inflation poses a “severe” threat to U.S. jobs and economic recovery.

He also said the Fed will raise rates higher than initially planned if needed to slow rising prices .

“If we have to raise interest rates more over time, we will,” Powell said. “High inflation is a severe threat to the achievement of maximum employment.”

Americans have been paying much more for groceries, gasoline and other consumer products over the past several months as production, distribution and other costs have risen.

Producer Price Index data released in December showed final demand – the price index on goods and services for producers – rose 0.8% in November alone with a 9.6% spike in the past year. That is the largest increase since the federal government began keeping track of these numbers in 2010.

At the same time, the Consumer Price Index, a major marker of inflation, has risen at the fastest rate in nearly 40 years.

The Department of Labor’s Bureau of Labor Statistics released data in December showing a 6.8% increase in prices in the previous 12 months.

Powell said Tuesday that rising demand on consumers combined with the supply chain crisis are both contributing to increased inflation.

“We can affect the demand side, we can’t affect the supply side. But this really is a combination of the two,” Powell told committee members.

President Joe Biden in November nominated Powell to serve a second term leading the central bank. The Senate must reconfirm him.