The core CPI value, which excludes volatile food and energy prices, rose 6% over the same period, ahead of the level of the previous month. Both measurements are among the largest price increases consumers have experienced since 1981.
“Inflation is getting higher and wider with a deteriorating outlook,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University. in Los Angeles. “The likelihood of a recession in the next year or so is increasing. Inflation is eating away at consumers’ purchasing power. Since consumer spending makes up about 70% of the economy, a real decline in consumer spending would deal a major blow to the economy.”
According to Mark Zandi, chief economist at Moody’s Analytics, the average American household spends about $460 more each month than last year to buy the same goods and services.
But the rise in energy prices was not limited to record petrol prices. Electricity prices rose 12% in the past 12 months, the largest annual increase since 2006. And the price of natural gas used by consumers rose 30.2%, the biggest jump since 2008.
Higher energy prices alone contributed 2 percentage points to the overall CPI.
It’s not just energy that drives prices up. The Department of Labor said nearly all major components that make up the index showed higher prices.
Prices for bought food to eat at home increased by 11.9%, the largest increase in 12 months since 1979, with a 32.2% increase for eggs, a 15.9% increase in milk and a 16.6% increase for poultry.
The shelter index, which measures rents and other housing costs, posted a 5.5% increase, the largest increase in twelve months since 1991. While that may not be as big an increase as the double-digit price increases in other categories, it is money that consumers spend on their homes, whether they rent or buy, are typically the biggest expenses they make each month.
Used car prices, which have shown signs of moderation with monthly declines in the past three months, rose again, pushing prices up 16.1% in the past 12 months. Meanwhile, new car prices have risen 12.6% over the same period. A shortage of computer chips has curbed production at car manufacturers and that limited stock is responsible for the price increase.
“Inflation is proving to be more persistent than it was commonly believed a year ago, when perishable was the buzzword,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “The two most important questions now? How far will the Fed go to cut inflation, and how far can the Fed go without pushing the economy into recession?”
While the inflation report brought fresh attacks on the Republican biden administration, the White House tried to blame the worst inflation on the rise in oil and gasoline prices after Russia invaded Ukraine.
“Today’s inflation report confirms what Americans already know. Putin’s price hike is hitting America hard,” President Joe Biden said at the Port of Los Angeles, where he paused from a regional summit to talk about what his team considers the most Urgent Current Issue: High prices for everything from gas to groceries.
Biden tried to both acknowledge the pain Americans feel, explain how he wanted to solve it, and blame others.
“I understand,” Biden said. “Inflation is a real challenge for American families.”
He denounced shipping conglomerates for raising prices and oil companies for buying back shares, singled out oil giant Exxon for making “more money than God” last year.
— Kevin Liptak of CNN contributed to this report.