Annual inflation rate in the US jumped to 7.9% in February, the highest since January of 1982, in line with market estimates. Energy remained the biggest contributor (25.6% vs 27% in January), with gasoline prices surging 38% (40% in January). Inflation accelerated for shelter (4.7% vs 4.4%, highest since May 1991); rent (4.17%, up from 3.76% and the highest since July 2007); food (7.9% vs 7%, the largest since July of 1981), namely food at home (8.6% vs 7.4%); new vehicles (12.4% vs 12.2%); and used cars and trucks (41.2% vs 40.5%). Excluding volatile energy and food categories, the CPI increased to 6.4%, the most in 40 years.
Today's reading showed the 21st straight month of MoM (non-transitory) increases in consumer prices. Source: Macrobond, XTB Research
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Energy and Services costs dominated the increases. Source: Macrobond, XTB Research
Meanwhile real wages (average hourly earnings) recorded 11th straight month of decline on a YoY basis, which is worrisome. Source: Bloomberg via ZeroHedge
However one needs to keep in mind that these inflation numbers are from February, before any real sanctions had any effect on prices. Before Russia attacked Ukraine many economists expected that inflation would reach its peak in March, however due to ongoing geopolitical tensions, supply constraints, strong demand, and labour shortages, many believe that inflation may be heading towards 9.0% in March and remain elevated for longer, therefore putting more pressure on FED.
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