Consumer prices likely hit 40-year high

U.S. consumers likely paid more for a variety of goods and services in February compared to the previous month and year, as prices soared across the economy amid persistent supply and demand imbalances .

The Bureau of Labor Statistics is set to release its February Consumer Price Index (CPI) Thursday at 8:30 a.m. ET, providing an update on the extent of inflationary pressures hitting consumers’ wallets directly. Consensus economists polled by Bloomberg expect the CPI to jump 7.8% in February from a year ago, which would mark the fastest annual jump since 1982. It would also remove the current rate of 7.5%, the highest in January in 40 years.

On a month-to-month basis, consumer price increases are likely to have accelerated as well. Economists expect the CPI to rise 0.8% in February from January, after rising 0.6% in the previous month.

A surge in energy prices is expected to be one of the main contributors to another scorching CPI print. Even before Russia invaded Ukraine and raised concerns about global energy supply disruptions, oil and gas prices were on the rise, with demand for fuel oil and other energy products outstripping supply. tense worlds. In January, the energy index was already up 27% compared to the same month in 2021.

Further impact from the Russia-Ukraine crisis and the ensuing protracted rise in energy prices will likely show up in CPI data in March, given that the invasion began in late February. Since then, gasoline prices at the pump have hit record highs and crude oil prices have hit 14-year highs and at least briefly topped $130 a barrel. And Russia’s isolation from other global economies has also led to volatility in agricultural commodities, including wheat – for which Russia is the world’s largest exporter – and added the specter of another price spike. foodstuffs.

Even excluding volatile food and energy prices, the so-called core CPI is also expected to pick up in February. Consensus economists are looking for a 6.4% jump in core CPI, which would also mark the fastest rise since 1982. Economists are looking for a recovery in core categories including vehicle prices and rents , along with an increase in air fares and accommodation prices. Disturbances related to Omicron from January have faded.

“At the component level, we will focus, as usual lately, on rents and vehicle prices,” Deutsche Bank economists Jiefu Luo and Justin Weidner wrote in a note on Tuesday. “Given that rents are one of the components of the CPI for which the Phillips curve seems to work, these high impressions are likely a function of the tight labor market.”

But even with the tight labor market and rising wages for many workers, inflation still rose at a faster rate than incomes could match. Average hourly wages last rose at an annual rate of 5.1% in February, Labor Department data showed last week.

“Sharp wage increases have not matched the higher costs that households face for rent, food, electricity, gasoline and a ubiquitous list of goods and services,” he said. Greg McBride, chief financial analyst at Bankrate, in an email Tuesday. “Americans’ purchasing power is being squeezed more and more every day, and you see that reality reflected in the austere readings of consumer sentiment.”

This post will be updated with February Consumer Price Index results Thursday at 8:30 a.m. ET. Check back for updates.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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