Inflation Report 2022: Consumer Price Index has risen 7.9% in the last 12 months, the biggest surge since 1982

Washington-Consumer inflation has skyrocketed 7.9% over the past year, boosted by soaring gas, food and housing costs. This is the surge since 1982 and could signal even higher prices in the future.

The rise reported by the Ministry of Labor on Thursday reflects the 12 months to February and does not include most of the oil and gas price increases following Russia’s invasion of Ukraine on February 24. According to AAA, one gallon is cents to $ 4.32.

Even before the war accelerated, US consumer inflation reached its highest level in 40 years due to rising prices, strong consumer spending, steady wage hikes, and sustained supply shortages. Moreover, housing costs, which account for about one-third of the government’s consumer price index, are rising sharply, and this trend is unlikely to reverse soon.

A government report on Thursday also showed that inflation rose 0.8% from January to February and 0.6% from December to January.

For most Americans, inflation is far more advanced than the salary increases many have received over the past year, making it difficult to buy essentials such as food, gas, and rent. As a result, inflation became the greatest political threat to President Joe Biden and Democrats in Congress as the midterm elections approached. Small business people say in a survey that it is also their main financial concern.

To stop the surge in inflation, the Federal Reserve plans to raise interest rates several times this year, starting with a modest rate hike next week. However, the Fed faces subtle challenges. If the Fed aggressively tightens credit this year, it could depress the economy and cause a recession.

Energy prices soared after Russia’s invasion of Ukraine surged again this week after Biden said the United States would ban oil imports from Russia. Oil prices fell on Wednesday, with reports that the United Arab Emirates urged fellow OPEC members to increase production. US oil was down 12% to $ 108.70 a barrel, but it’s still up significantly from about $ 90 a barrel before Russia’s invasion.

more: Here’s how President Biden fights US inflation:

However, the energy market is so volatile that it is impossible to know if the decline will continue. Analysts estimate that if Europe joins the United States and the United Kingdom and bans Russia’s oil imports, prices could skyrocket to $ 160 per barrel.

The economic impact of Russia’s war on Ukraine has overturned widespread assumptions among many economists and the federal government. Inflation will begin to ease this spring as prices rise sharply in March and April 2021 and are down compared to a year ago.

If gas prices remain close to current levels, Eric Winograd, senior economist at asset manager AllianceBernstein, estimates that inflation could reach 9% in March or April.

See: There are several ways you can save on your pump

The cost of wheat, corn, cooking oil and metals such as aluminum and nickel has also risen since the invasion. Ukraine and Russia are major exporters of these commodities.

Even before Russia’s invasion, inflation not only rose sharply, but also spread to additional sectors of the economy. Due to the shortage of supply of automobiles, building materials, household goods, etc., many prices have skyrocketed in the past year.

But even for some services that aren’t pandemic-affected, like rent, costs are skyrocketing at the fastest pace in decades. Steady employment growth and high home prices have led more people to move into apartments, with rents highest in 20 years. The vacancy rate of apartments has reached the lowest level since 1984.

In the last three months of last year, wages and salaries surged 4.5%. This is the fastest increase in at least 20 years. With these salary increases, many companies have raised prices to offset rising labor costs.

Soaring energy costs are a particularly difficult task for the Fed. Rising gas prices tend to accelerate inflation and weaken economic growth. That’s because their salaries are eroded by gasoline pumps, so consumers usually spend less in other ways.

The pattern resembles the dynamics of “stagflation,” which made the 1970s economy disastrous for many Americans. However, most economists say the US economy is growing strong enough that high inflation is unlikely to cause the next recession.

Copyright © 2022 By AP communication. all rights reserved.

Inflation Report 2022: Consumer Price Index has risen 7.9% in the last 12 months, the biggest surge since 1982

Source link Inflation Report 2022: Consumer Price Index has risen 7.9% in the last 12 months, the biggest surge since 1982

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