Inflation Reached 7.9% in February, Highest YOY Increase in 40 Years
American consumers who feel as though they’re spending more and getting less these days aren’t alone. In recent months, inflation has been a significant concern as prices on everyday items have steadily risen. Indeed, a new report shows inflation on the rise once again — and there are reasons to fear that things could climb even more.
Today, the Bureau of Labor Statistics released its latest report, showing that the Consumer Price Index rose by 0.8% in February. What’s more, over the past year, the index has risen 7.9%, marking this the highest yearly rate of inflation recorded since 1982. February’s increase was led by price spikes in the energy sector (up an average of 3.5%) while food prices also rose an average of 1%. Meanwhile, although the price of used vehicles only fell slightly, the 0.2% decrease was the first drop since September. Still, year over year, used vehicles prices have grown an average of 41.2%.
Notably, the latest report doesn’t yet reflect impacts from the war in Ukraine. While gas prices rose 6.6% in February and 38% year over year, gas prices have continued to spike since, reaching a new record high this week. Furthermore, the upward trajectory isn’t expected to reverse course for some time.
Commenting on the figures to MarketWatch, Navy Federal Credit Union corporate economist Robert Frick offered some bad news, stating, “February’s CPI reading was the highest in 40 years — again — but what was once forecast to be the inflation peak is now the jumping off point for ever higher inflation sparked by the war in Ukraine.”
Similarly, Capital Markets senior economist Sal Guatieri explained, “Inflation will catch a fourth wind from the Russian-Ukraine war,” before presenting some potentially good news, continuing, “However, assuming the situation doesn’t escalate and commodity prices pull back a bit, inflation should turn lower after the spring.”
With inflation continuing to rise, a new survey from LendingTree found that many Americans who have added debt during the pandemic cite inflation as a reason why. In total, 30% of respondents reported increasing their pandemic-era credit card debt with 48% blaming inflation as a key driver. The second most common reason offered for the increase in debt was loss of income, which was noted by 34% of respondents with rising debt.
At this point, it’s pretty clear that the U.S.’s inflation rate won’t be subsiding just yet. In turn, stocks have slumped since the release of the report. Ultimately, with fresh uncertainty coming from the war among other factors, it looks as though a return to normality might not look as normal as once hoped.