Consumer price increases in the United States raced to a new 40-year high in February, mainly to rising fuel, food, and housing expenses.
Especially, with inflation expected to grow even more following Russia’s invasion of Ukraine.
The consumer price index increased 7.9% from a year ago, following a 7.5 percent increase in January.
According to Labor Department data released Thursday. Inflation jumped 0.8 percent in February compared to the previous month, owing to increasing gasoline, food, and shelter expenses.
Both results matched the average projections of economists polled by Bloomberg.
So-called core prices grew 0.5 percent from a month ago. Meanwhile, 6.4 percent from a year ago, excluding unstable food and energy components.
The figures show how much inflation was tightening its hold on the economy before Russia’s invasion.
Along with, a product price increase, including the highest retail gasoline price ever. Most experts projected annual inflation to peak in February.
However, the conflict is likely to result in substantially higher inflation readings in the coming months.
On Bloomberg Television, Michael Gapen, chief U.S. economist at Barclays Plc, stated, “Inflation is unlikely to roll over and begin to fall down for several more months.”
“This establishes the context for where we are now.” And we’ll have to wait and watch how long this fight lasts, as well as how disruptive the sanctions system is.”
The Federal Reserve will raise interest rates for the first time since 2018 next week to address rising pricing pressures. The geopolitical environment, on the other hand, adds to the anxiety.
If energy price shocks lead to greater and more persistent inflation. As a result, the Fed officials may become more combative.
Although, if falling consumer mood and dropping real wages begin to impact on growth as the battle drags on, they may become more cautious.
According to the February report, fuel prices increased by 6.6 percent from the previous month, accounting for over a third of the monthly increase in the CPI.
Some of this could be attributed to energy price rises in the aftermath of Russia’s invasion in the last week of the month. In the March CPI data, the impact will be more completely recognised.
The retail price of regular-grade gasoline has risen 19.3 percent to $4.32 a gallon so far this month.