There’s ‘nowhere to hide’ for consumers as inflation hits food, gas,

On Mar 10, 2022

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Consumer prices are rising at their fastest pace in decades — and that inflation has been most acute in household staple items like food, housing and transportation, making it hard to escape the budgetary sting.

The Consumer Price Index jumped 7.9% in February relative to a year earlier, the largest 12-month increase since January 1982, the U.S. Department of Labor said Thursday.

The index measures price fluctuations across a broad basket of goods and services. A $100 basket a year ago would cost $107.90 today.

Shelter, gasoline and food were the largest contributors to the increase in overall prices in February, the Labor Department said. (The price index jumped by 0.8% over the month.)

These three categories were the three largest components of household budgets in 2020, respectively. Together, they accounted for 63% of total expenses, according to most recent Labor Department data.

“There’s nowhere to hide,” said Greg McBride, chief financial analyst for Bankrate. “This is hitting everybody.”

Inflation “is most pronounced on items that are necessities,” he added.

(Gasoline is part of the broader “transportation” category, which also includes public transit costs and vehicle purchases. Car sales have also spiked over the last year.)

Of course, inflation doesn’t impact all consumers equally. For example, a consumer who commutes by car and has to fill up a gas tank may feel higher prices more acutely than one who works from home or uses public transportation. And American workers have gotten big raises in the past year, reducing (though not always overriding) the sting of higher prices.

The Federal Reserve is also expected to start raising interest rates next week in an attempt to tame inflation.

The big three

Household grocery bills swelled by 8.6% in the last 12 months, the largest jump since April 1981, according to the Labor Department.

Costs for all major food groups increased in February; dairy and fruits and vegetables saw prices rise at their fastest monthly pace in over a decade.

Gasoline price are up 38% in the last year. That statistic doesn’t include the recent run-up due to Russia’s invasion of Ukraine, which pushed prices at the pump to more than $4 a gallon, on average, on Sunday — the highest since 2008.

Overall energy costs (which include items beyond gasoline) are up the most since July 1981, on an annual basis.

Shelter costs like rents are up 4.7% in the last year, the most since May 1991. While that percentage increase was smaller than in other categories, housing costs account for more than a third of the average household budget — giving it an outsized dollar impact.

“That comparatively benign increase … is likely to put the biggest squeeze on household budgets for the remainder of the year,” McBride said.

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