WASHINGTON–With new federal data showing inflation has hit a four-decade high, one credit union economist said consumers should brace for ongoing price increases.
The Consumer Price Index, which measures a basket of goods and services, stood at 7.9% over the 12-month period that ended in February, without seasonal adjustments, the Bureau of Labor Statistics reported. Prices for gas, food and housing -- which are necessary rather than discretionary spending -- drove the February price increases.
“Consumer prices in February rose to their highest monthly increase since October 2021, setting another 40-year record,” said Dr. Dawit Kebede, CUNA’s senior economist. “Price increases in energy, food, and services contributed the most gains. This may continue in the coming months considering the impact of the war in Ukraine on global energy and food prices. Prices for services such as travel and recreation increased this month, and, as COVID cases continue to decline, it will add additional pressure.
“Additionally, businesses are expected to pass the rising costs of finding workers on to consumers. This shows that the list of underlying causes for price increases have expanded beyond supply chain disruptions and a shift in consumer demand from services to goods during COVID,” Kebede continued.
Kebede said the increase in interest rates that is expected to come out of this month’s meeting of the Federal Reserve’s Open Market Committee will slow down consumer demand by making the cost of borrowing more expensive.
“However, there is little that the Fed can do to control prices caused by a global conflict, just like there is little it can do to improve supply chain disruptions,” he added.
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