Consumer prices increased 7.9% in the 12 months ending in February, further fueling the anxiety surrounding the country’s explosive inflation.
The much-anticipated numbers reported by the Bureau of Labor Statistics on Thursday revealed the extent of the inflation that has plagued the United States during its recovery from the coronavirus pandemic. The pace of inflation is the highest it has been since 1982.
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“The pervasiveness of price increases continues, but it is most acute for necessities such as food, shelter, and energy, which were the biggest contributors,” Bankrate Chief Financial Analyst Greg McBride said. “Costs for food at home are up nearly 8% in the past year, energy costs are up over 25% in that time, and shelter with a comparatively benign increase of 4.4% is likely to put the biggest squeeze on household budgets for the remainder of the year.”
“Household inflation is pervasive and goes well beyond just food and gasoline costs. The increase in core prices, which provides a look at inflation excluding food and energy, is up 6.4% in the past year, also the highest since 1982,” he added.
High inflation has hurt President Joe Biden’s ability to pass his spending agenda given that some centrist lawmakers are uncomfortable infusing more money into the economy during a time of growing inflation.
The hot inflation numbers come at a critical juncture. The Federal Reserve is gearing up to hike interest rates for the first time in years next week to stave off the higher prices. The central bank is then expected to keep raising rates several times this year.
While some analysts had thought that the Fed would opt for an aggressive hike of half a percentage point right out of the gate next week, Fed Chairman Jerome Powell tamped down that speculation during a recent congressional hearing and suggested that the rate hike would rather be a traditional 1/4 point increase.
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The Fed has a narrow dual mandate: achieving maximum employment and maintaining price stability, or keeping inflation in check. Given that the employment situation has been continually improving, the central bank is now even more laser-focused on reining in inflation.
