WASHINGTON (AP) — An inflation gauge closely monitored by the Federal Reserve jumped 6.4% in February compared with a year ago, with sharply higher prices for food, gasoline and other necessities squeezing Americans’ finances.
Join our WhatsApp groupSubscribe to our Daily Roundup Email
The figure reported Thursday by the Commerce Department was the largest year-over-year rise since January 1982. Excluding volatile prices for food and energy, so-called core inflation increased 5.4% in February from 12 months earlier.
Robust consumer demand has combined with shortages of many goods to fuel the sharpest price jumps in four decades. Escalating the inflation pressures, Russia’s invasion of Ukraine has disrupted global oil markets and accelerated prices for wheat, nickel and other key commodities.
The inflation spike took a toll on consumers, whose spending in February rose just 0.2%, down from a much larger 2.7% gain in January. Adjusted for inflation, spending actually fell 0.4% last month.
The Federal Reserve responded this month to the inflation surge by raising its benchmark short-term interest rate by a quarter-point from near zero, and it’s likely to keep raising it well into next year. Because its rate affects many consumer and business loans, the Fed’s rate hikes will make borrowing more expensive and could weaken the economy over time.
Michael Feroli of JPMorgan is among economists who now think the Fed will raise its key rate by an aggressive half-point in both May and June. The central bank hasn’t raised its benchmark rate by a half-point in two decades, a sign of how concerned it has become about the persistent surge in inflation.
On a monthly basis, prices rose 0.6% from January to February, up slightly from the previous month’s increase of 0.5%. Core prices rose 0.4%, down from a 0.5% increase in January.
Gas prices have soared in the past month in the aftermath of Russia’s invasion, which led the United Kingdom and the Biden administration to ban Russia’s oil exports. The cost of a gallon of gas shot up to a national average of $4.24 a gallon Wednesday, according to AAA. That’s up 63 cents from a month ago, when it was $3.61.
Thursday’s report follows a more widely monitored inflation gauge, the consumer price index, that was issued earlier this month. The CPI jumped to 7.9% in February from a year ago, the sharpest such increase in four decades.
Many economists still expect inflation to peak in the coming months. In part, that’s because price spikes that occurred last year, when the economy widely reopened, will begin to make the year-over-year price increases appear smaller. Yet Fed officials project that inflation, as measured by its preferred gauge, will still be a comparatively high 4.3% by the end of this year.
All those naive people who voted for Biden now they are .
Thank you sooooooooooooooooooo much trump for not aking covid seriously for months and allowing it to ravage our country. We are now suffering the consequences of that. He promised us in February of 2020 that whoever wanted a covid test could get one and that we had enough ppe… to cover everyone who would need it, only to reverse course on all that later and blame Obama administration for bare cupboards.
Anyway someone needed to write something other than “Thanks Biden for ruining the country” or “Beijing Joe brings worst inflation ever to this country”… something other than the same old same old tired and unoriginal boring rhetoric. Maybe just maybe this isnt 100 percent Biden’s fault. Maybe it has to do with covid. Maybe wars in other countries. Maybe something else. But for those with their ine track minds they will find that this 100 percent all because of the Biden administration and nothing else was a factor at all. Life is usually likely that after all, completely and totally black and white and good and evil and pure and impure. No such thing as two wrongs or mitigating factors or unintended consequences or external factors, someone is either 100 percent wrong or 100 percent wrong, never ever is there any in between.