Inflation kept getting worse in February, as price increases broke new records with no sign of slowing down.
The consumer price index increased 7.9% over the past 12 months, the Bureau of Labor Statistics reported Thursday, reaching a new 40-year high for the measure of a wide range of U.S. goods and services prices. The gain for the month of February was 0.8%.
Inflation rose at the fastest rate since 1982, when there was an economic recession, beating the record set in January. Price increases for gasoline, shelter, and food were the largest contributors to the overall CPI increase.
Economists surveyed by Dow Jones had expected inflation to increase 7.8% for the year and 0.7% for the month, so their predictions underestimated the actual inflation rate.
Gasoline prices rose 6.6% in February, a significant spike that comes amid war between Russia and Ukraine and harsh U.S. sanctions imposed on Russia in response. The price consumers pay at the pump has gone up about 24% over the past month and 53% in the past year, according to the American Automobile Association.
Food prices increased 1% for the fastest monthly gain since April 2020, which was shortly after COVID-19 lockdowns began to go into effect. Shelter costs increased 0.5% in February and a total of 4.7% over the past year, which was the largest annual increase since May 1991.
While wages are rising as well, any increase in worker paychecks is being erased by higher prices at the gas pump and the grocery store. At face value, wages rose 5.1% over last year. But adjusted for inflation, average hourly earnings actually fell by 0.8% in February and decreased by 2.6% over the past year, according to BLS data.
Most Americans have effectively taken a pay cut because of inflation, and that's showing in the cost of living. A recent report by LendingCLub found that at the start of 2022, 64% of Americans were living paycheck to paycheck, up from 61% in December and approaching the high of 65% from 2020.
As it turns out, inflation was not "transitory," as many policymakers had suggested last year. The Federal Reserve is expected to announce the first of a series of interest rate hikes next year in an attempt to combat rising prices. It will be the first interest rate increase in more than three years and a reversal of the Fed's zero interest rate policy, according to CNBC.