(Robert Hughes, American Institute for Economic Research) AIER’s Everyday Price rose 1.3 percent in February after jumping 1.0 percent in January. From a year ago, the Everyday Price Index is up 9.5 percent, the highest since September 2008 and the sixth highest ever for the Everyday Price Index.
Gains were generally broad-based in February with 21 of the 24 components making a positive contribution for the month. However, motor fuel (62 basis points) and food at home (35 basis points) accounted for 98 of the 130-basis point gain for the month. That was followed by a 7-basis-point contribution from restaurants (food away from home) and a 4-basis-point contribution from housekeeping supplies. The remaining contributions were 3 basis points or less.
Motor fuel prices, which are often a significant driver of the monthly changes in the Everyday Price index because of the large weighting in the index and the volatility of the underlying commodity, rose 5.4 percent for the month and are up 38.1 percent from a year ago.
The Everyday Price Index including apparel, a broader measure that includes clothing and shoes, rose 1.4 percent in February after gaining 1.1 percent in January. Over the past year, the Everyday Price Index including apparel is up 9.3 percent, up from 8.8 percent in January. That is the fastest pace since August 2008 and the third-fastest pace on record. Apparel prices rose 3.1 percent on a not-seasonally-adjusted basis in February. Apparel prices tend to be volatile on a month-to-month basis. From a year ago, apparel prices are up 6.6 percent.
The Consumer Price Index, which includes everyday purchases as well as infrequently purchased, big-ticket items and contractually fixed items, rose 0.9 percent on a not-seasonally-adjusted basis in February. Over the past year, the Consumer Price Index is up 7.9 percent, significantly less than the 9.5 percent rise in the EPI but still a multidecade high.
The Consumer Price Index excluding food and energy rose 0.7 percent for the month (not seasonally adjusted) while the 12-month change came in at 6.4 percent, also a multidecade high. The 12-month change in the core CPI was just 1.3 percent in February 2021 and 2.4 percent in February 2020, before the pandemic.
After seasonal adjustment, the CPI rose 0.8 percent in February while the core increased 0.5 percent for the month. Within the core, core goods prices were up 0.4 percent in February and are up 12.3 percent from a year ago. The 0.4 percent monthly gain was the slowest since a 0.3 percent rise in September 2021 and is less than half the average monthly gain over the October 2021 through January 2022 period.
Core services prices were up 0.5 percent for the month and are up 4.4 percent from a year ago. Among core services, gainers include owners’ equivalent rent (which accounts for 24.2 percent of the CPI, rose 0.4 percent for the month and 4.3 percent from a year ago), airfares (up 5.2 percent and 12.7 percent from a year ago), auto maintenance and repair (up 1.7 percent and 6.3 percent from a year ago), and health insurance (up 1.9 percent for the month and 4.1 percent from a year ago).
Price pressures for many goods and services in the economy remain elevated due to shortages of supplies and materials, logistical and supply chain issues, and labor problems. While cresting numbers of new Covid cases in late January and early February had the potential to support businesses’ efforts to improve supply chains and expand production, geopolitical and global economic turmoil surrounding the Russian invasion of Ukraine is launching a new wave of disruptions to businesses.
The outlook has become highly uncertain and extreme caution is warranted.