Inflation hits another 40-year high, as gas prices continue to surge
The U.S. Consumer Price Index has increased 7.9% over the past 12 months. This is due to the fact that food, shelter, and gas prices continued rising in February. Gas accounts for nearly a third the monthly CPI index increase.
The inflation rate has steadily risen throughout winter and was last month no exception. This is the consumer price indexThe index that tracks the changes in American spending on certain goods and services increased another 0.8% in February. the Labor Department reported Thursday.
Although the annual price increase was higher than in any other year in over 40 years it was still within analysts’ expected range. Following a 0.6% increase in January, the cost of almost all consumer goods rose 0.5% to February.
Also, rents increased by 0.6%. It’s significant because housing is often the most expensive item in household budgets. Also, the food index grew 1% in May. This is the highest monthly growth since April 2020.
According to the U.S. Labor Department data, here’s how prices rose last year for different items:
The January gas price increase was 0.8%, which seemed to slow down. However, fuel prices rose 6.6% in February and have risen 38% in the past year.
The invasion of Ukraine has caused gas prices to soar dramatically in recent weeks. This means inflation will likely continue into spring.
According to Stephen Stanley (chief economist at Amherst Pierpont), “I believe the energy price surge will prove to be mostly temporary,” so we might see some relief before midyear depending on when the war in Ukraine is resolved and how long other oil and gas supply companies take to backfill Russia’s sanctioned exports.”
Jerome Powell, Chairman of Federal Reserve warned Senate Banking Committee last week that there would be “increased pressure on inflation for at least a while” due to the Russian invasion in Ukraine.
Powell already stated that he would raise the federal funds rates by 0.2% when central bank officers meet next week. Inflation can be controlled by raising interest rates. This increases borrowing costs, which in turn discourages spending.