The Bureau of Labor Department released its monthly report on Thursday, and the data showed that once again, inflation is at a record high. The Consumer Price Index for the month of February was 7.9 percent, largely driven by the price of fuel. This is the highest inflation since February 1982, when inflation reached 7.6 percent. Last month’s report had inflation at 7.5 percent. As a result, inflation rose 0.8 percent in a month over month analysis.
From the end of January until February 28, the price of most every category of goods rose. The price of gasoline rose by 6.6 percent, and this factor alone is the cause of at least one-third of price hikes. The cost of groceries rose by about 1.4 percent. This is the highest surge in the price of groceries since 1990, with the exception of a hike that occurred at the beginning of the pandemic exactly two years ago this week in March. Fruits and vegetables rose in cost about 2.3 percent, which is the greatest increase on a monthly scale since 2010.
Looking at the rising cost of goods on a year-over-year basis, the Labor Department says this is the largest increase on the price of groceries since 1981. Housing costs have gone up by 4.7 percent, which is the largest yearly increase since 1991. Gasoline prices during the same time period are up by an astounding 38 percent.
Although many American workers have received raises in the past year, the average pay increase was only by about 5 percent. With inflation at 7.9 percent, Americans are struggling to meet the steadily rising costs of fuel, groceries, and housing.
Readers should note that the information released Thursday did not take into account the surging cost of gas since the Russian invasion into Ukraine, which occurred on February 28. As of Thursday, the national average of gas rose to $4.31 per gallon. AAA says this is a record high.
Since Russia began its assault on Ukraine, the costs of certain commodities has risen, including wheat, corn and cooking oil. Metals such as aluminum and nickel have seen price hikes as well. These items are the chief exports of Ukraine and Russia.
Inflation has seeped into every aspect of the American economy. Supply chain issues late last year began to affect the prices of lumber and other building materials, in addition to household goods. Americans began to see empty shelves at the grocery store as many nonperishable items were stuck on cargo ships outside the major ports of Los Angeles and Long Beach. While other ports began to accept shipments, the supply chain was adversely affected for some time. Experts say that there are still issues with the supply chain, and this has had a profound effect on inflation as well.
This month, the Fed is expected to raise interest rates in an effort to bring the surging inflation down. However, this action will serve to prohibit businesses from procuring often necessary loans, and it could affect the housing market as many borrowers will be loathe to obtain a loan at a higher interest rate. Yet, Fed Chair Jerome Powell says that the Fed must be “nimble and humble” while at the same time raising rates in an effort to stifle inflation. Some economic experts are predicting up to seven interest rate hikes in 2022 alone.
The Biden Administration says that the high price of gasoline is due to the Russian invasion, but, the Labor Department report shows that gas prices were up nearly forty percent from this time last year – and the report does not contain data that includes the increases seen after Putin’s invasion in Ukraine.
The Biden Administration is even touting the hashtag “PutinPriceHike” in an effort to lay blame for these skyrocketing prices on anything but the policies launched in the last year. Earlier this week, Secretary of Transportation Pete Buttigieg announced $187 billion for four initiatives that would replace current gas-powered public transportation buses with electric ones. Buttigieg also mentioned during this announcement that all Americans would benefit from utilizing electric vehicles, but he did not elaborate.
