US consumer prices jumped in February, posting the biggest annual rise in 40 years, and inflation is expected to pick up in coming months as Russia’s war with Ukraine pushes up the cost of oil and other commodities.
The consumer price index rose 0.8% last month, up 0.6% in January, the Labor Department said on Thursday (10).
In the 12 months through February, the index soared 7.9%, the highest increase on this basis of comparison since January 1982, after a 7.5% jump in January.
Economists polled by Reuters had predicted the index would rise 0.8% on the month and 7.9% from a year earlier.
Inflation has persisted well above the Federal Reserve’s 2.0% target. The US central bank is expected to start raising rates next Wednesday to curb inflation, with economists expecting up to seven price hikes this year.
The February inflation data did not fully capture the surge in oil prices following Russia’s invasion of Ukraine on February 24. Brent prices have soared 30% since then, reaching a high since 2008 of $139 a barrel earlier in the week.
In that context, “our estimates suggest that gasoline and natural gas prices are on track to add 1 percentage point or more to overall annual inflation readings each month for the next ten months,” said Kevin Cummins, chief economist for USA at NatWest Markets.
Inflation was already a problem before the war between Russia and Ukraine, in the wake of a shift in spending from services to goods during the Covid-19 pandemic.
Excluding the volatile food and energy components, the consumer price index rose 0.5% last month after advancing 0.6% in January.
In the 12 months through February, the so-called core price index rose 6.4%. That was the biggest year-on-year gain since August 1982 and followed a 6.0% rise in January.
In a separate report, the Labor Department said initial claims for unemployment benefits increased by 11,000 to a seasonally adjusted 227,000 in the week ended March 5.
Economists predicted 217,000 new requests for the last week. Orders are down from a record 6.149 million reached in early April 2020.
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