ABC News: US Inflation Soared 7.9% in Past Year, a Fresh 40-year High
Article by Christopher Rugaber in ABC News
Propelled by surging costs for gas, food and housing, consumer inflation jumped 7.9% over the past year, the sharpest spike since 1982 and likely only a harbinger of even higher prices to come.
The increase reported Thursday by the Labor Department reflected the 12 months ending in February and didn’t include most of the oil and gas price increases that followed Russia’s invasion of Ukraine on Feb. 24. Since then, average gas prices nationally have jumped about 62 cents a gallon to $4.32, according to AAA.
Even before the war further accelerated price increases, robust consumer spending, solid pay raises and persistent supply shortages had sent U.S. inflation to its highest level in four decades. What’s more, housing costs, which make up about a third of the government’s consumer price index, have risen sharply, a trend that’s unlikely to reverse anytime soon.
The government’s report Thursday also showed that inflation rose 0.8% from January to February, up from the 0.6% increase from December to January.
For most Americans, inflation is running far ahead of the pay raises that many have received in the past year, making it harder for them to afford necessities like food, gas and rent.
Seeking to stem the inflation surge, the Federal Reserve is set to raise interest rates several times this year beginning with a quarter-point hike next week. The Fed faces a delicate challenge, though: If it tightens credit too aggressively this year, it risks undercutting the economy and possibly triggering a recession.
From January to February, nearly every category of goods and services got pricier. Grocery costs jumped 1.4%, the sharpest one-month increase since 1990, other than during a pandemic-induced price surge two years ago. The cost of fruits and vegetables rose 2.3%, the largest monthly increase since 2010. Gas prices spiked 6.6%, clothing 0.7%.
For the 12 months ending in February, grocery prices leapt 8.6%, the biggest year-over-year increase since 1981, the government said. Gas prices are up a whopping 38%. And housing costs have risen 4.7%, the largest yearly jump since 1991.
The economic consequences of Russia’s war against Ukraine have upended a broad assumption among many economists and at the Fed: That inflation would begin to ease this spring because prices rose so much in March and April of 2021 that comparisons to a year ago would show declines.
Should gas prices remain near their current levels, Eric Winograd, senior economist at asset manager AllianceBernstein, estimates that inflation could reach as high as 9% in March or April.
Even before Russia’s invasion, inflation was not only rising sharply but also broadening into additional sectors of the economy.
That pattern is akin to the “stagflation” dynamic that made the economy of the 1970s miserable for .......
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