Inflation rose 7.9% in February, as food and energy costs push prices to highest in more than 40 years

The escalating Ukraine crisis and the intensifying price pressures exacerbated inflation. This led to an increase in inflation in February.

The Consumer Price Index, which tracks a large-ranging range of goods and services over a 12-month period, rose 7.9%, an increase that is a record for this closely-followed gauge. This was a 40-year highest. according to the Labor Department’s Bureau of Labor Statistics.

This February acceleration marked the most rapid pace since January1982, when the U.S. faced the double threat of lower economic growth and higher inflation.

CPI gained 0.8% in the month. Dow Jones polled economists to determine that they had forecast headline inflation rising by 7.8% and 0.7% respectively for the year.

The fastest monthly increases in food prices and at-home food sales were 1.4% and 1% respectively, which are both unprecedented gains for the first month of 2019. Covid-19 pandemic.

The biggest driver of rising prices was energy, which saw prices rise 3.5% in February. This account for almost one third of the headline increase. Shelter costs, which are responsible for around one-third the CPI weighting and accelerated 0.5% more, for an annual rise of 4.7%. It is the fastest increase in an year since May 1991.

Customer refuels in a Chevron gasoline station at prices higher than $4 per gallon, Seattle, Washington on Monday March 7, 2022.
Bloomberg | Bloomberg | Getty Images

Core inflation, which excludes volatile food and high energy prices, rose 6.4% in accordance with expectations and is the highest level since August 1982. Core CPI increased 0.5 per month, which is consistent with Wall Street’s expectations.

Workers’ paychecks were further affected by inflation, despite strong rises.

The real inflation adjusted average hourly earnings in February fell 0.8%, which contributed to 2.6% decrease over the previous year. according to the BLS. This happened despite the fact that headline earnings increased 5.1% compared to a year earlier, but they were outweighed by price increases.

Indicates markets a negative open on Wall StreetAn environment of faltering stocks has forced them to sell. Russia-Ukraine cease-fire talks. After the CPI report, government bond yields rose.

Mike Loewengart (managing director, investment strategy at E-Trade), stated that while inflation is on the rise, there is no surprise in what this report shows. The market has likely priced in the increase in inflation and instead is focusing on Ukraine and its downstream effects from commodities. These shockwaves are already causing havoc.

Inflation has risen in line with the price increases over the last year. The unprecedented spending spree by the government and persistent disruptions in supply chains have caused inflation to rise. This has led to an increase in prices, especially for services.

As supply chain problems ease, policymakers expect inflation to decrease. New York Fed supply chain indexIt is evident that pressure has decreased in 2022 but it remains at historic high levels.

Inflation has been strong in vehicle costs, but they showed some signs of slowing down in February. The prices of used cars and trucks actually fell 0.2%. This is their first negative sign since September 2021. However, they have risen 41.2% during the past year. The month saw new car prices rise 0.3% and 12.4% respectively over the 12 months.

The raging European crisis has only exacerbated the prices pressures. As sanctions against Russia coincide with rising gasoline costs, so have price rises. AAA reports that prices at the pump have increased by 24% in just one month, and 53% in the entire past year.

In order to meet the rising cost of raw materials, businesses are increasing their pay and increasing wages in an historically tight labor market. 4.8 million more job openingsThere are more workers than available.

A record-breaking number of smaller businesses have raised prices in recent surveys by the National Federation of Independent Business.

The Federal Reserve will announce next week the first in a series interest rate increases to slow down inflation to try and stem this trend. This will mark the end of the zero-interest rate policy of the Federal Reserve and unprecedented cash injections to an economy which grew at the fastest pace for 37 years in 2021.

Inflation isn’t a U.S.-centric issue.

The same forces that affect the national economy can also impact global prices, so central banks are taking action. Thursday the European Central Bank saidAlthough it did not move its benchmark rate, the company would be ending its asset buying program sooner than anticipated.

Other economic news: The week ending March 5 saw 227,000 jobless claims, which is higher than the estimated 216,000 and an increase of 11,000 over the previous week. the Labor Department said. Although continuing claims increased slightly to below 1.5million, the 4-week moving average was at its lowest point since 1970.

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