US Inflation Spikes as Consumer Prices Jump in February 2013

The American cost of living surged in February by the biggest amount in nearly four years, new inflation data from the US government shows.

Soaring gasoline prices, as expected, led increases. Consumers paid 9.1% more at the pump last month and that accounted for almost 75% of the gain in the Consumer Price Index (CPI), the government’s key measure of US Inflation.

US consumer prices jumped 0.7% in February for the largest increase since June 2009 and the first monthly advance since October. Consumer prices were flat during each of the two previous months, held down by cheaper energy.

In addition to costlier gasoline, American consumers paid 3.1% more for fuel oil, 1.2% more for natural gas and 0.3% more for electricity. Combined, the energy index went up 5.4% to contrast sharply from the 1.7% decline in the previous month.

On a positive note for Americans, gas prices for March have eased a bit. The average for regular gasoline hit a four-month high of $3.79 a gallon on February 26, reports AAA. The national average is now down almost a dime to $3.695. If the trend continues, next month’s CPI report is likely to show a decline in inflation.

Food prices also climbed last month, up 0.1% overall after being flat in January. The Bureau of Labor Statistics on Friday reported the following on food costs in its monthly Consumer Price Index (CPI) report:

"Among major grocery store food group indexes, the fruits and vegetables index rose 1.4 percent, with both the fresh fruits and fresh vegetables indexes increasing 1.8 percent. The index for meats, poultry, fish, and eggs also rose in February, increasing 0.5 percent. The index for nonalcoholic beverages was unchanged in February, while the remaining major grocery store food group indexes declined. The index for other food at home fell 0.6 percent as the indexes for sugars and sweets and for fats and oils declined. The index for dairy and related products declined 0.4 percent and the cereals and bakery products index fell 0.2 percent; both indexes rose in January."

Stripping out the more volatile food and energy categories, the so-called core US Inflation rate in February was 0.2%. That compares to the 0.3% increase in January which was the biggest advance since May 2011.

Among costlier core items were used cars and trucks (+0.8%), shelter (+0.2%), recreation (+0.3%), medical care (0.2%) and transportation (+0.1%). Falling items included tobacco (-0.2%), clothing (-0.1%), airfares (-0.3%) and new vehicles (-0.3%) — the largest drop since January 2010.

US inflation gained 2.0% over the past 12 months compared to the increase of 1.6% in the 12 months ending January. (See US inflation rates since 2003).

Core US inflation also advanced 2.0% year-over-year through February. The 12-month reading was 1.9% in each of the previous three months. The core US inflation rate is watched closely by the Federal Reserve as it helps decide where the central bank sets its benchmark interest rate. The level is right at the Fed’s 2% inflation target.

"The increase will jangle some nerves at the Fed, but policymakers will remain focused on ensuring the economic upturn looks sustainable and robust before worrying too much about inflation," CNNMoney quoted Chris Williamson, Markit chief economist.

US inflation data from August through February and over the past 12 months follow.

August 2012 – February 2013 Consumer Prices – Gains in Percent

  Aug 2012 Sept 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 Feb 2013 12
Month
All items 0.5 0.5 0.2 -0.2 .0 .0 0.7 2.0
  Food 0.2 0.1 0.2 0.2 0.2 .0 0.1 1.6
    Food at home 0.1 -0.1 0.3 0.3 0.2 .0 0.1 1.2
    Food away from home 0.3 0.2 0.1 0.1 0.1 0.1 0.1 2.3
  Energy 4.6 3.9 0.1 -3.4 -0.8 -1.7 5.4 2.3
    Energy commodities 7.3 6.1 0.1 -5.7 -1.5 -3.0 8.6 3.1
      Gasoline (all types) 7.6 6.3 -0.1 -6.0 -1.9 -3.0 9.1 3.3
      Fuel oil 4.6 4.1 1.1 -0.2 .0 -0.2 3.1 2.3
    Energy services 0.4 0.4 .2 0.6 0.3 0.4 0.5 0.9
      Electricity 0.1 0.1 0.3 0.4 0.2 1.1 0.3 0.8
      Utility (piped) gas service 1.5 1.2 -0.2 1.5 0.7 -1.7 1.2 1.3
  All items less food, energy 0.1 0.2 0.2 0.1 0.1 0.3 0.2 2.0
    Comm. less food, energy -0.2 -0.1 .0 -0.1 -0.1 0.2 .0 0.3
      New vehicles 0.2 .0 0.1 0.3 0.2 0.1 -0.3 1.1
      Used cars and trucks -1.1 -1.4 -0.7 -0.4 -0.3 0.2 0.8 -0.2
      Apparel -0.1 0.5 0.6 -0.5 0.1 0.8 -0.1 2.4
      Medical care 0.3 -0.1 0.1 -0.3 -0.3 0.1 -0.4 0.8
    Services less energy 0.1 0.2 0.2 0.2 0.2 0.3 0.2 2.6
      Shelter 0.2 0.2 0.2 0.2 0.1 0.2 0.2 2.3
      Transportation .0 0.5 0.6 0.2 0.4 0.5 0.1 3.1
      Medical care 0.2 0.3 0.1 0.3 0.3 0.2 0.3 3.9

 

The US Bureau of Labor Statistics (BLS) will release the next round of Consumer Price Index data on April 16, 2013 at 8:30 AM ET. This inflation information will show consumer prices in March 2013. The CPI is the core data used in this site’s US Inflation Calculator.

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