The Bureau of Labor Statistics reported that consumer prices rose 0.4 percent in February, faster than the 0.2 percent increase in January. As we saw with yesterday’s producer prices release, higher energy costs led this acceleration, up 3.2 percent. Gasoline prices alone went up 6 percent. On an annual basis, consumer prices are up 2.9 percent.
This increase is a prime example of the need for an “all of the above” energy strategy to take advantage of our domestic resources to lower energy prices.
Food prices were unchanged overall. The prices of fats and oils, for instance, were offset by falling prices for meats, daily, fruits and vegetables. When food and energy costs are excluded, core inflation is running at 2.2 percent, essentially unchanged from the 2.3 percent reading last month.
Outside of food and energy prices, other consumer cost changes were mostly modest. Apparel was one of the exceptions, with prices down 0.9 percent. This reverses the 0.9 percent gain last month.
Overall, consumer inflation remains modest, but with the recent run-up in energy costs, prices have accelerated. This will squeeze Americans’ pocketbooks, and depending on how sustained it is, it could also zap consumer confidence in upcoming surveys.
Chad Moutray is chief economist, National Association of Manufacturers.