American consumers likely paid more for various goods and services in February compared to the previous month and year, with prices rising across the economy amid continued supply and demand imbalances.
The Bureau of Labor Statistics will release its February Consumer Price Index (CPI) Thursday at 8:30 am ET, providing an update on the extent of inflationary pressures directly affecting consumer wallets. Consensus economists polled by Bloomberg expect the CPI to rise 7.8% year-over-year in February, the fastest annual jump since 1982. It will also lower January’s current 40-year high of 7.5%.
On a monthly basis, consumer price growth is likely to pick up as well. Economists expect the CPI to rise 0.8% in February from January, after rising 0.6% the previous month.
The surge in energy prices will be one of the key factors behind another red-hot imprint of the consumer price index. Even before Russia invaded Ukraine and raised concerns about global disruptions in energy supplies, oil and gas prices were rising as demand for fuel oil and other energy commodities exceeded the world’s short supply. In January, the Energy Index was already up 27% compared to the same month in 2021.
The further impact of the Russo-Ukrainian crisis and the extended surge in energy prices that followed is likely to show up in the March CPI data, given that the invasion first began in late February. Since then, gas prices at the gas station have soared to record levels, while crude oil prices have surged to a 14-year high and at least briefly topped $130 a barrel. And Russia’s isolation from other world economies has also led to volatility in agricultural commodities, including wheat, for which Russia is the world’s largest exporter, and added to the specter of a further spike in food prices.
Even without taking into account volatile food and energy prices, the so-called core consumer price index will also accelerate in February. Consensus economists are expecting a 6.4% jump in the core consumer price index, also the fastest rise since 1982. The crashes associated with Omicron in January are gone.
The story goes on
“At the component level, our focus, as usual of late, will be on rent and car prices,” Deutsche Bank economists Jiefu Luo and Justin Weidner wrote in a note on Tuesday. “Given that rent is one component of the CPI for which the Phillips curve seems to work, these elevated footprints are likely a function of a tight labor market.”
But even with a tight labor market and rising wages for many workers, inflation still rose faster than incomes could match. Average hourly wages last rose 5.1% year-on-year in February, Labor Department data showed last week.
“The significant wage increase does not match the higher costs households face for rent, food, electricity, gasoline and a wide range of both goods and services,” Greg McBride, chief financial analyst at Bankrate, said in an email on Tuesday. “The purchasing power of Americans is declining more and more every day, and you see this reality reflected in the harsh measures of consumer sentiment.”
This post will be updated with February CPI results on Thursday at 8:30 AM ET. Keep for updates.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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