WASHINGTON, March 10 (Reuters) – U.S. consumer prices surged in February, with Americans digging deeper into their wallets to pay for rents, food and gasoline, and inflation is poised to accelerate further in the months ahead as Russia’s war against Ukraine drives up the costs of crude oil and other commodities.
The broad rise in prices reported by the Labor Department on Thursday led to the largest annual increase in inflation in 40 years. Inflation was already haunting the economy before Russia’s invasion of Ukraine last month, and could further erode President Joe Biden’s popularity.
The Federal Reserve is expected to start raising interest rates next Wednesday. With inflation at nearly 4 times the U.S. central bank’s 2% target, economists are expecting as many as seven rate hikes this year. Lower income households bear the brunt of high inflation as they spend more of their income on food and gasoline.
“Consumers’ shock at rapidly rising gas prices at the pump will continue to put pressure on the Fed and policy makers to do something, anything, to slow down the speed at which prices everywhere are moving higher,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
“There are many people who point out that the Fed can’t control supply chains or increase the efficiency of our ports, but they never could. What they can control is interest rates and they are much too low.”
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Source: Reuters
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