CLEVELAND — Prices kept climbing last month across the country, fueling key inflation data to levels not seen since the early 1980s, according to Consumer Price Index data released Thursday by the U.S. Bureau of Labor Statistics.
The Consumer Price Index, the commonly-used measurement in tracking inflation, slightly surpassed Wall Street expectations and stood at 7.9% in February. The CPI, which measures a basket of common goods and services like energy, food, and housing, tracks price changes in a given month compared to the same month the previous year (February 2022 vs February 2021).
Although the CPI includes fuel and food prices, which tend to be volatile, the so-called ‘core CPI’ that doesn’t include those products showed inflation grew by 0.5%.
The rise in inflation last month was largely driven by increases in energy costs, particularly gasoline, which ballooned after Russia’s invasion of Ukraine. However, inflation had already been steadily increasing since March 2021, climbing from 2.1% to nearly 8%. Russia’s invasion of Ukraine and the subsequent sanctions will likely cause prices to rise even further.
“Unfortunately I don’t see much improvement in the inflation numbers for a while,” said Patrick De Haan, the head of petroleum analysis at GasBuddy.com. “Before we let CPI define how we feel, there should be a caveat of we’re comparing it to a point where the economy wasn’t as strong a year ago. Having said that, I don’t see much improvement. This is a long road to recovery.”
If water sustains life, oil helps to sustain economies and supply chains. With the removal of Russian oil from the market because of sanctions, as many as 5 million barrels of oil per day cannot be used to ship or manufacture a myriad of different products, including plastics, makeup, and clothing.
“As long as oil is high, that filters down to so many of those CPI numbers: deliveries, logistics, Ubers, Lyfts, your plane tickets, your cruise, your grocery prices, your lumber, your electronics, your clothing, your plastics, makeup, mascara. Everything is impacted by the price of oil,” De Haan said. “Now, it’s impacting the low incomes especially. Gasoline is like a regressive tax. It hurts the people that are driving older, less fuel-efficient vehicles. It’s going to be a struggle for them.”
To combat rising inflation, the Fed is expected to increase interest rates multiple times over the course of the year, likely starting with a small increase later this month.