By Lucia Mutikani

WASHINGTON (Reuters] – In February, the U.S. trade deficit remained at a record level as imports and exports soared. It indicates that trade remained a significant drag on economic growth during the first quarter.

On Tuesday, the Commerce Department released a report that added to data showing a moderated consumer and business spending. This suggests the economy suffered from high inflation caused by scarcity.

In February, the trade deficit fell 0.1% to $89.2 trillion. In February, the trade deficit fell 0.1% to $89.2 trillion. Reuters polled economists and predicted a deficit of $88.5 billion.

The record February 228.6 billion mark was reached by goods and services exports. This is 1.8% higher than the previous record. These exports were also boosted by an 1.8% rise in the value of goods exported, which reached an all time high. Record highs of $20.3 billion were set for petroleum exports. The rise was probably due to the higher prices of oil after Russia’s invasion in Ukraine.

According to Ryan Sweet (a senior economist with Moody’s Analytics, West Chester, Pennsylvania), “Russia’s invasion in Ukraine caused oil prices worldwide to rise and this will impact the nominal U.S. Trade deficit in March.”

The exports of consumer goods rose by $1.3B, and the pharmaceutical sector saw an increase of $1.5B. However, capital goods exports fell $0.7 billion due to a decrease in civil aircraft of $1.0 billion.

Due to the shipments of military equipment that Russia sent after its February 24 invasion, Ukraine’s exports reached a new record.

The $1.3 billion increase in services exports to $69.9 billion was attributed to a $1.2 Billion rise in travel, which is accompanied by a substantial decline in COVID-19-related infections.

Exports of goods, and services rose 1.3% to record levels of $317.8billion 1.6% increase was recorded in imports of goods to record $266.2 million The highest imports of materials and industrial supplies rose $3.4 Billion to June 2011, the highest since June 2011.

The $1.9 Billion surge in oil prices fueled them, reaching $76.37/barrel, its highest level since November 2014.

Record highs were reached for both capital imports and consumer goods. Imports of parts, engines and motor vehicles fell by $3.2 billion. Due to rising costs of transport, intellectual property and travel, imports of services grew $2.4 billion to $51.6 trillion.

Businesses rebuilding inventories is the primary driver behind the surge in imports. This was the major factor in gross domestic product growth during the fourth quarter.

Andrew Hunter is a Senior U.S. Economist at Capital Economics. “While most of the strength and imports appear to reflect inventory building, which would normally provide a boost to growth,” he said.

After inflation adjustment, February’s goods trade deficit fell to $1.6 billion from $116.3 billion. Six consecutive quarters have seen trade decline in gross domestic product growth.

The growth estimates for the first quarter vary from a low 0.4% annualized rate up to a high of 2.8%. In the fourth quarter, GDP grew 6.9%.