Prices in the US just continue going up. According to the US Labor Department, the annual inflation rate rose to 7.9% last month — marking the biggest year-on-year increase since 1982 — and up from 7.5% in January.
Consumers face higher energy, food and shelter costs. Despite the pay raises that many Americans enjoyed in the past year, they simply haven’t been enough to offset the effects of inflation. What’s also noteworthy is that the increase in February didn’t include the spike in oil and gas prices we’ve seen since the Russian invasion of Ukraine.
Breakdown of the February data
- Energy rose 3.5 percent in February after a 0.9-percent increase in January — up 25.6 percent over the past 12 months.
- Gasoline rose sharply in February, up 6.6 percent after falling 0.8 percent in January.
- Shelter rose 4.7 percent over the last year, marking the biggest 12-month spike since May 1991.
- Rent increased by 0.6% compared with January and increased by 4.2% annually.
- Food costs rose 1% from January and 7.9% over the past year.
- Rent increased by 0.6% compared with January and increased by 4.2% annually.
- Air fares rose 5.2% from the previous month
Inflation could get much worse
Given that the impact of the Ukraine crisis is yet to be felt, inflation could get much worse. Consumers are going to have to start adapting by spending less on discretionary items and more on essential goods.
It’s becoming increasingly difficult to make ends meet in the US, and unless something is done about the soaring inflation rates, things are only going to get worse.
Eric Winograd, senior economist at asset management firm AllianceBernstein, was quoted by ABC news as saying:
“The numbers are eye-watering, and there is more to come.
“The peak in inflation will be much higher than previously thought and will arrive later than previously expected.”
Why is inflation bad for the economy?
There are a few key reasons why inflation is bad for the economy. First, when prices go up, it means that people have less money to spend on other things. This can lead to decreased economic activity and lower levels of employment.
Second, high levels of inflation make it difficult for businesses to plan for the future. It becomes harder to forecast sales and make long-term investments when prices are constantly changing. This can lead to a decrease in economic growth and an overall weaker economy.
Third, high levels of inflation can cause people to lose trust in the government and the financial system. When prices are rising rapidly, it can be difficult to know whether or not your money is safe. This can lead to a loss of confidence in the economy and decreased economic activity.
