Consumer prices likely set fresh 40-year high

US consumers likely paid more for a variety of goods and services in February compared to the prior month and year, with prices climbing across the economy amid lingering supply and demand imbalances.

The Bureau of Labor Statistics is set to release its February Consumer Price Index (CPI) Thursday at 8:30 am ET, providing an update on the extent of inflationary pressures directly hitting consumers’ wallets. Consensus economists polled by Bloomberg are looking for the CPI to jump by 7.8% in February compared to last year, which would mark the fastest annual jump since 1982. It would also take out January’s current 40-year high rate of 7.5%.

On a month-over-month basis, consumer price increases likely also accelerated. Economists are looking for the CPI to rise 0.8% in February compared to January, after increasing by 0.6% during the prior month.

A surge in energy prices is set to be one of the key contributors to another red-hot CPI print. Even before Russia invaded Ukraine and raised concerns over global energy supply disruptions, oil and gas prices were on the rise, as demand for fuel oil and other energy products outstripped tight global supplies. In January, the energy index was already up by 27% compared to the same month in 2021.

A further impact from the Russia-Ukraine crisis and extended jump in energy prices that has ensued will likely show up in the CPI data in March, given the invasion first began in late February. Since then, gas prices at the pump have jumped to record levels, and crude oil prices have climbed to 14-year highs and at least briefly topped $ 130 per barrel. And Russia’s isolation from other global economies has also driven volatility across agricultural commodities including wheat – for which Russia is the world’s largest exporter – and added the specter of a further jump in food prices.

Even excluding volatile food and energy prices, the so-called core CPI is also set to accelerate in February. Consensus economists are looking for a 6.4% jump in the core CPI, which would also mark the fastest rise since 1982. Economists are looking for a pick-up in core categories including vehicle and rent prices, alongside a rise in airfares and lodging prices as Omicron-related disruptions from January faded.

“At the component level, our focus, per usual of late, will be on rents and vehicle prices,” Deutsche Bank economists Jiefu Luo and Justin Weidner wrote in a note Tuesday. “Given that rents are one of the components of the CPI for which the Phillips curve seems to work, these elevated prints are likely a function of the tight labor market.”

But even with the tight labor market and increasing wages for many workers, inflation has still been rising at a faster clip than earnings have been able to match. Average hourly earnings last rose at a 5.1% annual rate in February, Labor Department data last week showed.

“Robust pay increases have been no match for the higher costs households are facing on rent, food, electricity, gasoline, and a pervasive list of both goods and services,” Greg McBride, chief financial analyst at Bankrate, said in an email on Tuesday . “The buying power of Americans is being squeezed more and more each day, and you see this reality reflected in the dour consumer sentiment readings.”

This post will be updated with the results of the February Consumer Price Index Thursday at 8:30 am ET. Check back for updates.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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