UNITED STATES NEWS

US inflation soared 7.9% in past year, a fresh 40-year high

Mar 10, 2022, 7:40 AM | Updated: Mar 11, 2022, 6:50 am

WASHINGTON (AP) — Propelled by surging costs for gas, food and housing, consumer inflation jumped 7.9% over the past year, the sharpest spike since 1982 and likely only a harbinger of even higher prices to come.

The increase reported Thursday by the Labor Department reflected the 12 months ending in February and didn’t include the oil and gas price surges that followed Russia’s invasion of Ukraine on Feb. 24. Since then, average gas prices nationally have jumped about 62 cents a gallon to $4.32, according to AAA.

Even before the war further accelerated price increases, robust consumer spending, solid pay raises and persistent supply shortages had sent U.S. inflation to its highest level in four decades. What’s more, housing costs, which make up about a third of the government’s consumer price index, have risen sharply, a trend that’s unlikely to reverse anytime soon.

“The numbers are eye-watering, and there is more to come,” said Eric Winograd, senior economist at asset management firm AllianceBernstein. “The peak in inflation will be much higher than previously thought and will arrive later than previously expected.”

The government’s report Thursday showed that from January to February, inflation rose 0.8%, up from a 0.6% increase from December to January. Excluding the volatile food and energy categories, so-called core prices rose a sharp 0.5% month to month and 6.4% from a year earlier. Economists tend to monitor core prices because they more closely reflect longer-running inflation trends.

For most Americans, inflation is running far ahead of the pay raises that many have received in the past year, making it harder for them to afford necessities like food, gas and rent. As a consequence, inflation has become the top political threat to President Joe Biden and congressional Democrats as the midterm elections draw closer. Small business people say in surveys that it’s their primary economic concern, too.

Seeking to stem the inflation surge, the Federal Reserve is set to raise interest rates several times this year, beginning with a quarter-point hike next week. The Fed faces a delicate challenge, though: If it tightens credit too aggressively this year, it risks undercutting the economy and possibly triggering a recession.

From January to February, nearly every category of goods and services got pricier. Grocery costs jumped 1.4%, the sharpest one-month increase since 1990, other than during a pandemic-induced price surge two years ago. The collective price of fruits and vegetables rose 2.3%, the largest monthly increase since 2010. Gas prices spiked 6.6%, clothing 0.7%.

For the 12 months ending in February, grocery prices leapt 8.6%, the biggest year-over-year increase since 1981, the government said. Gas prices are up a whopping 38%. And housing costs have risen 4.7%, the largest yearly jump since 1991.

Lydia Boussour, an economist at Oxford Economics, estimates that if oil remains at $120 a barrel for the rest of this year — which it topped Tuesday before slipping — it would cost U.S. households $1,500, on average. It would also weaken economic growth by about 0.8 percentage point this year, she said. Many economists have cut their growth estimates for 2022 by roughly a half-point to about 2.5%.

Across the country, individual Americans as well as companies are struggling with the inflation spike and trying to minimize its impact.

“Gas prices are above the roof, especially with spring vacation coming up for the kids,” Vikas Grover said while filling up his car Monday in Herndon, Virginia. “It definitely takes our overall budget much, much higher.”

In San Jose, California, Maurice Brewster, the founder of Mosaic Global Transportation, a limousine and transportation company with nearly 100 vehicles, has been hammered by gas prices. A couple of months ago, Brewster had been paying $4 a gallon. On Monday, the price was $6.39.

“Inflation has been a killer,” he said. “I feel it every day.”

A major part of Brewster’s business is shuttling workers from San Francisco to Silicon Valley companies like Google, Meta (formerly known as Facebook) and Merck. Gas costs are built into those contracts, and Brewster is now passing on the higher prices.

Brewster also rents limos to consumers for weddings, wine tours and other functions, and that business has boomed as pandemic restrictions have eased. He plans to add a 10% fuel surcharge for consumer rentals and is praying that his customers will pay it.

“I’m anticipating that it will not stop them from still wanting to get out and having a good time,” he said. “I hope I’m not wrong.”

Energy prices, which soared after Russia’s invasion of Ukraine, jumped again this week after Biden said the United States would bar oil imports from Russia. Oil prices did retreat Wednesday on reports that the United Arab Emirates will urge fellow OPEC members to boost production. But they rose again Thursday.

The Biden White House has attributed much of the inflation surge to the ability of a few corporate giants to dominate industries and squeeze out competition that would otherwise lower prices. The administration argues that meat prices, for example, are higher because four meat-packing firms control the industry.

In his State of the Union address last week, Biden asserted that the U.S. should manufacture more goods at home, rather than overseas, to avoid the supply chain backups that are bedeviling many companies. Yet producing more competition or more home-grown products would take time and wouldn’t reduce inflation anytime soon.

Republicans in Congress and many economists say the Biden administration’s $1.9 trillion financial rescue package, which distributed stimulus checks and enhanced unemployment benefits to tens of millions of households after the pandemic struck, contributed to high inflation by accelerating consumer spending.

The economic consequences of Russia’s war have upended a broad assumption among many economists and at the Fed: That inflation would begin to ease this spring because prices rose so much in March and April of 2021 that comparisons to a year ago would show declines. That won’t likely happen. Should gas prices remain near their current levels, Winograd estimates that inflation could reach as high as 9% in March or April.

Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, suggested that a key question in coming months will be whether higher gas costs seep into the broader economy by escalating costs for items like shipping and airline tickets. Such core price increases usually take longer to fade than volatile energy costs do.

Slower growth poses a particularly difficult challenge for the Fed, because it comes at a time that higher gas prices are also lifting inflation. That pattern is akin to the “stagflation” dynamic that made the economy of the 1970s miserable for many Americans.

Most economists, though, say they think the U.S. economy is growing strongly enough that another recession is unlikely.

___

APTN photo journalist Dan Huff contributed to this report.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Lifetime Windows & Doors

United States News

Yvette Rodier, who survived a thrill kill and was shot 4 times in 1996, discusses what the survivor...
Amy Donaldson

‘The Letter’ dives into survivor’s trauma after healing from bullet wounds

In the latest episode of "The Letter" podcast, shadows follow Yvette Rodier long after the bullet wounds to her head had healed.
9 hours ago
Associated Press

Amazon suspends at least 50 workers after fire protest

NEW YORK (AP) — Amazon has suspended at least 50 warehouse employees who refused to work their shifts following a trash compactor fire at one of its New York facilities, according to union organizers. The company suspended the workers, with pay, on Tuesday, a day after the fire disrupted operations at the Staten Island warehouse […]
9 hours ago
Associated Press

Maryland governor to testify at former aide’s trial

BALTIMORE (AP) — Maryland Gov. Larry Hogan will be called as a witness in the federal fraud trial of his former chief of staff, Roy McGrath, a rarity for a sitting governor. The Daily Record reports that the disclosure is part of a joint filing of proposed questions for prospective jurors. Michael Ricci, a Hogan […]
9 hours ago
Democratic Gov. Janet Mills and Republican Paul LePage shake hands following a debate, Tuesday, Oct...
Associated Press

Republican LePage says he would veto 15-week abortion ban

PORTLAND, Maine (AP) — Former Republican Gov. Paul LePage, who’s seeking his old job back, said he’d veto a bill banning abortions at 15 weeks, delivering disappointing news to abortion opponents. LePage provided the answer in a labored exchange Tuesday evening during the first debate of the governor’s race with current Democratic Gov. Janet Mills […]
9 hours ago
FILE - A 10-point white-tailed deer walks through the woods in Freeport, Maine, on Nov. 10, 2015. W...
Associated Press

‘Forever chemicals’ in deer, fish challenge hunters, tourism

PORTLAND, Maine (AP) — Wildlife agencies in the U.S. are finding elevated levels of a class of toxic chemicals in game animals such as deer — and that’s prompting health advisories in some places where hunting and fishing are ways of life and key pieces of the economy. Authorities have detected the high levels of […]
9 hours ago
Geneva, Fla., resident Joe Shaw, top, navigates his flooded street, Whitcomb Drive, Tuesday, Oct. 4...
Associated Press

Florida’s island dwellers digging out from Ian’s destruction

ST. JAMES CITY, Fla. (AP) — Following Hurricane Ian’s destruction, many residents on one Florida island have stayed put for days without electricity and other resources while hoping the lone bridge to the mainland is repaired. Pine Island, the largest barrier island off Florida’s Gulf Coast, has been largely cut off from the outside world […]
9 hours ago

Sponsored Articles

...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
...
Day & Night Air Conditioning, Heating and Plumbing

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
US inflation soared 7.9% in past year, a fresh 40-year high