The cost of goods and services continued to climb higher in February, reaching a 40-year high. The Consumer Price Index (CPI) for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, has been trending up since January 2020 and increased 7.9% year-over-year in February 2022, according to the Bureau of Labor Statistics. That surpassed the previous 40-year high of 7.5% set in January and marked the largest annual increase since January 1982 when the country was in a severe economic recession. Inflation has been hovering around 40-year highs for four consecutive months. Accounting for much of the recent increase, energy prices were up 25.6% in the year-ending February, with fuel oil prices surging 43.6% and gasoline prices jumping 38%. Food prices climbed 7.9% on an annual basis, with the increase in the price of meat (14%) heavily contributing to that upturn. The recent overall increase in consumer prices was also partly attributed to surging prices of pre-owned vehicles, as the price of used cars and trucks soared 41.2% in the year-ending February. Excluding food and energy prices, which can be volatile, the core CPI rose 6.4% year-over-year. While less than the surge in the all items index, it was still the sharpest increase since the year-ending August 1982. Recent inflation reflects a surge in demand and shortages in materials and labor. To slow demand and reduce inflation, the Federal Reserve System is expected raise interest rates for the first time in more than three years in March, with several more hikes expected throughout the remainder of the year.
