Inflation hits new 40-year high as gasoline prices continue to rise
Consumer prices in the United States have risen 7.9% over the past 12 months as the cost of food, shelter and gasoline continued to rise in February, with gasoline accounting for nearly the third of the monthly increase in the CPI.
Inflation has been climbing steadily all winter, and the past month has been no different. The consumer price index, which tracks the price Americans pay for certain goods and services, rose another 0.8% in February, the Labor Department reported Thursday.
Although the year-over-year price increase was the highest in 40 years, it was in line with analysts’ expectations. The cost of most consumer goods, excluding food and gasoline, rose 0.5% in February, following a 0.6% rise the previous month.
Rents also increased by 0.6%. This is a significant increase, since housing is generally the biggest expense in the household budget. The food index also rose 1%, the biggest monthly increase since April 2020.
Here’s how much prices have gone up for various items over the past year, according to data from the US Department of Labor:
Gas prices continue to rise
Gasoline price increases appeared to stabilize in January and fell 0.8%. But the cost of fuel jumped 6.6% in February, and last year gasoline prices rose 38%.
Gas prices have skyrocketed over the past two weeks due to the invasion of Ukraine, meaning inflation is likely to continue through the spring.
“I expect the spike in energy prices to be mostly temporary, so we could see some relief by the middle of the year, depending on how long it takes for the war in Ukraine is resolved and how long it will take other oil and gas suppliers to step in and fill Russia’s sanctioned exports,” writes Stephen Stanley, chief economist at Amherst Pierpont, in a briefing.
Last week, Federal Reserve Chairman Jerome Powell warned the Senate Banking Committee that “we’re going to see upward pressure on inflation at least for a while” in light of the Russian invasion. from Ukraine.
Powell has already indicated he will raise the federal funds rate by 0.25% at the meeting of central bank officials next week. A rise in interest rates can help calm inflation because it increases the cost of borrowing, which discourages spending.
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