U.S. inflation accelerates as Russia's war in Ukraine intensifies energy price pressures
Economists see little relief ahead as supply chain disruptions, soaring energy prices and COVID-19 lockdowns in China fuel inflation
By [Author's Name] March 10, 2023
U.S. inflation accelerated in February as Russia's war in Ukraine intensified energy price pressures, according to data released Thursday, with economists seeing little relief ahead as supply chain disruptions, soaring energy prices and COVID-19 lockdowns in China fuel inflation.
The consumer price index, a broad measure of the prices Americans pay for everyday goods and services, rose 0.8% in February from the previous month, according to the Labor Department. That was the biggest monthly increase since January 2022 and brought the annual inflation rate to 7.9%, the highest since January 1982.
The increase was driven by a 25.6% surge in energy prices, the largest 12-month increase since April 1980. Gasoline prices jumped 38.9% over the past year, while heating oil prices soared 49.6%.
Food prices also continued to rise, with the food index climbing 1.4% in February and 7.9% over the past year. The index for food at home, which measures prices at grocery stores, rose 1.3% in February and 8.6% over the past year.
The core CPI, which excludes volatile food and energy prices, rose 0.5% in February and 6.4% over the past year. That was the biggest annual increase in the core CPI since August 1982.
Economists had expected inflation to moderate in February after a sharp decline in energy prices in January. But the war in Ukraine has sent energy prices soaring again, and economists now see little relief ahead for consumers.
"The war in Ukraine is a major shock to the global economy, and it's going to have a significant impact on inflation," said Mark Zandi, chief economist at Moody's Analytics.
"We're already seeing the impact of higher energy prices at the gas pump and in our heating bills, and that's going to continue in the months ahead," Zandi said. "We're also going to see higher food prices, as Russia and Ukraine are major exporters of wheat and other commodities."
The Federal Reserve is widely expected to raise interest rates again at its next meeting in March in an effort to tame inflation. But economists say the Fed's efforts may be limited by the war in Ukraine and other global factors.
"The Fed is going to have a very difficult time getting inflation under control," said Diane Swonk, chief economist at Grant Thornton.
"The war in Ukraine is a game-changer," Swonk said. "It's going to make it much more difficult for the Fed to raise interest rates without causing a recession."
