The increase in consumer prices in the United States accelerated in the month of February to new maximums in the last 40 years. Due to rising costs for gasoline, food, and housing. Also, inflation could rise further after Russia’s invasion of Ukraine.
The consumer price index (CPI) increased by 7.9% compared to the previous year. After an annual increase of 7.5% during the month of January, according to data from the Department of Labor Statistics of the United States, published today Thursday. The inflation gauge increased 0.8% during February from the previous month, reflecting a substantial increase in the costs of gasoline, food and housing.
Figures from the Department of Labor show an inflationary cloud over the US economy that has proven to be more persistent and expansive. Rising prices have pushed the US Federal Reserve (FED) to end two years of near-zero interest rates. Starting with a quarter increase from previous rates, possibly as soon as next week. Also as a result of the situation, the approval ratings of President Joe Biden have fallen before the November elections. Which could cost Democrats their slim majorities in Congress.
Statistically, the month of February is the peak of inflation for the United States. However, now the readings for the coming months will rise above 8%, according to some economists. This is because the war in Ukraine and Biden’s ban on imports from Russia restricted oil supplies and caused the price of gasoline in the United States to rise sharply.
The Consumer Price Index (CPI) continues to rise in the United States
Wage increases as a result of a tight labor market that has not kept pace with inflation. Inflation-adjusted hourly earnings fell 2.6% during February from a year earlier. The biggest drop since May last year.
Likewise, merchandise prices continued to increase in February, while the annual growth of service costs accelerated. Year over year, real estate inflation rose 13% (the most since 1980). That included the largest-ever annual increase in prices for new cars and trucks.
Additionally, utility costs rose 4.8% from a year earlier, their biggest increase since 1991.
Housing costs, which are considered the most structural component of the CPI and make up about a third of the overall index, rose 0.5% from the previous month, the most since November. Residential rent also increased 0.6% per month, the biggest advance since 1987.
Vehicle repair costs soared by a record 4.3% since January. And the personal care index jumped 1.2%, an unprecedented increase.
However, prices for hotel stays and airfares recovered in February. After the decline in economic activity related to the new strain of Covid Omicron, in December and January.
The energy crisis could accelerate US inflation
The current geopolitical situation adds uncertainty to the interest rate hike cycle of the Central Bank of the United States for next year. Federal Reserve officials could take a more aggressive stance if energy shocks cause higher and persistent inflation. But they could also take a more cautious approach if consumer sentiment sinks and falling real wages begin to weigh on growth, as the conflict in Ukraine drags on.
Consumer Price Index (CPI) data for February showed gasoline prices rose 6.6% from the previous month and accounted for almost a third of the monthly increase. Some of that may be reflected in spikes in energy prices, as a result of the first days of the Russian invasion during the last week of the month. The real impact will be more fully captured in the next CPI report for March.
So far this month, the price of regular gasoline has risen 19.3% to an average of $4.45 a gallon, according to data from the American Automobile Association.
Likewise, food prices rose 1% from the previous month, the biggest advance since April 2020, according to the CPI.
While the full impact of the Ukrainian conflict on the US economy is not entirely clear. Rising costs for oil, grains and metals are likely to trickle down to other commodities and ultimately consumer prices.
On Tuesday, the Biden administration banned imports of Russian oil into the United States. A measure that will increase the pressures on the general prices of American products.
