Consumers in U.S paid more for goods and services in February compared to the preceding month and year amid soaring inflation and commodity costs and lingering supply chain crisis.
The Bureau of Labor Statistics’ Consumer Price Index (CPI) rose 7.9% in February compared to last year, marking the fastest annual jump since 1982. The figure in higher than January’s 40-year higher rate of 4.5% and in complete match to consensus as earlier compiled by Bloomberg.
On a month-over-month basis, consumer price increases also accelerated. The CPI rose 0.8% in February compared to January after increasing by 0.6% during the prior month.
Main attribution behind surging inflation can be pointed towards surge in energy prices. It is to be noted even before Russia-Ukraine war broke out global energy prices were rallying at record high. In February, the energy index jumped 3.5% for the largest monthly rise since October. And over last year, the energy index was up 25.6%.
The impact from Russia-Ukraine war on energy items would likely to be reflected in March CPI data. Since the war has started crude oil price jumped to 14-year high and isolation of Russia also had probable impact on agricultural commodities.
In February, the food price index rose 1% month-on-month.
Excluding volatile energy and food prices, the core CPI likely to have accelerated as well in February. The core CPI rose 6.4% in February over last year to also set the fastest rate since 1982. Prices of housing which is one of the stickier item on inflationary list accelerated in February with rent prices rose to 0.6% compared to the preceding month.
However, even given the tight labor market and increasing wages, inflation rose faster than wage rate. According to Labor Department data, in February average hourly earnings rose at 5.1% annual rate.
“Robust pay increases have been no match for the higher costs households are facing on rent, food, electricity, gasoline, and a pervasive list of both goods and services,” Greg McBride, chief financial analyst at Bankrate, said in an email on Tuesday, as reported by Bloomberg.
“The buying power of Americans is being squeezed more and more each day, and you see this reality reflected in the dour consumer sentiment readings.”
