After beginning the year in a buying mood, Americans slowed their spending in February on gadgets, home furnishings and other discretionary items as higher prices for food, gasoline, and shelter consumed more of their wallets.
The Labor Department said Tuesday that its producer price index—which tracks inflation before it hits consumers—rose another 0.8% from January to February.
The Federal Reserve on Wednesday will launch one of the most difficult tasks a central bank can attempt: Raise borrowing costs enough to slow growth and tame high inflation, but not so much as to topple the economy into recession.
The average price of gasoline at the pump is $1.54 higher per gallon than it was a year ago.
The surcharge will be in effect for at least 60 days, after which Uber said it will assess the situation.
Economists say the one-two punch of rising prices and the intensifying geopolitical crisis could put the brakes on the rapid rebound and raise the risks of recession.
For the 12 months ending in February, grocery prices leapt 8.6%, the biggest year-over-year increase since 1981, the government said. Gas prices are up a whopping 38%. And housing costs have risen 4.7%, the largest yearly jump since 1991.
Oil prices soared early Monday before retreating. Benchmark U.S. crude surged to $130 a barrel overnight, then moderated to around $119, a 3% gain, in afternoon trading. The international price skyrocketed to $139 before falling back to about $123 a barrel.
Markets worldwide have swung wildly recently on worries about how high prices for oil, wheat and other commodities produced in the region will go because of Russia’s invasion, inflaming the world’s already high inflation.
The Labor Department’s report Friday also showed that the unemployment rate dropped from 4% to a low 3.8%, extending a sharp decline in joblessness as the economy has rebounded from the pandemic recession.
Oil passed $110 a barrel, aluminum hit a fresh record and wheat rose to the highest since 2008. In Europe, natural gas prices and coal set all time highs, deepening the region’s energy crisis.
Chairman Jerome Powell said Wednesday that he supports a traditional quarter-point increase in the Federal Reserve’s benchmark short-term interest rate when the Fed meets later this month, rather than a larger increase that some of its policymakers have proposed.
Moscow’s war on Ukraine and the ferocious financial backlash it’s unleashed are not only inflicting an economic catastrophe on President Vladimir Putin’s Russia. The repercussions are also menacing the global economy.
Robust consumer spending has combined with widespread product and worker shortages to create the highest inflation in four decades—a heavy burden for U.S. households, especially lower-income families faced with elevated costs for food, fuel and rent.
The debate over how quickly to raise interest rates is being closely watched by financial markets and also could have an impact on the broader economy.
Americans are paying nearly a dollar more for a gallon of gas than they did last year as the growing threat of war in Ukraine moved oil prices higher.
Federal Reserve Governor Michelle Bowman said Monday that she was open to lifting interest rates by more than the traditional quarter-point at the central bank’s next meeting in March.
Walmart executives said that its shoppers are still in good financial shape, and they don’t see any major changes in consumer behavior patterns like trading down to cheaper labels—although they’re paying close attention to higher prices.
In total, fewer than 1.6 million Americans were collecting jobless aid the week that ended Feb. 5, a decrease of about 26,000 from the previous week.
Volatility in retail sales data is emerging after the pandemic and as related supply crunches drastically altered the behavior of Americans
