When it comes to inflation, you probably ain’t seen nothing yet--at the gas pump, in your grocery store and in what you pay for rent or a new home.
The consumer price index soared 7.9% in the 12 months ended in February, the highest since 1982. Almost all of that gain came before Russia invaded Ukraine on Feb. 24. The war will be fully reflected in March inflation numbers, which means trouble.
Gasoline, shelter, and food prices were the largest contributors to the February inflation increase. And the price spike in commodities that has occurred since the Ukraine war began probably will send gas and food prices still higher.
Gas prices already jumped 6.6% in February from January, accounting for almost a third of the 0.8% monthly increase for CPI. As for this month, the average national gas price stood at $4.32 per gallon Thursday, up 24% from a month ago and 53% from a year ago.
With the U.S. ban on oil imports from Russia, which provides 8% of our crude oil and petroleum products, those gas prices may well keep rising.
Looking at food prices, they surged 7.9% from a year ago, the largest rise since 1981. And they climbed 1% in February from January, the biggest gain since April 2020. As Russia and Ukraine are major exporters of wheat and other agricultural items, food inflation will likely keep ascending too.
As for shelter, which accounts for about one-third of the CPI, rent for primary residences rose 0.6% in February from January, the biggest gain since 1987. The overall shelter price climbed 0.5% in February from January.
Home prices have increased by double-digit percentages in recent months. And given the steep increase in construction prices, among other issues, there’s good reason to believe price appreciation will continue.
If you’re looking to buy a new car, this probably won’t be a good time. New car and truck prices posted a record annual gain in February. And the factors pushing prices higher, especially supply chain disruption, aren’t going anywhere--at least for the near term. The war is exacerbating supply chain issues.