Data compiled before the economic fallout from the Russian invasion of Ukraine began to spread around the world shows that US inflation jumped to 7.9% in February, the highest in four decades and mainly driven by large increases in spending on essentials.
February inflation was even higher for consumers in Mountain West states, including Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming, where 12-month price increases reached a national record of 9.7%.
The new data reflects an increase from the national average inflation of 7.5% recorded in January and 9.0% in Mountain West states in the same month.
The U.S. Department of Labor CPI report released Thursday showed that prices rose in almost all categories, with gas, food and housing spending being the “biggest driver of seasonally adjusted gains across all commodities.”
Over the past 12 months, food prices have increased by 8.6%, gas prices by 38% and housing prices by 4.7%, according to a new report.
The food group indexes of all six major grocery stores rose in February. The fruit and vegetable index saw the most gains, climbing 2.3%, the biggest monthly gain since March 2010. The fresh fruit index increased 3.7% on the month, while the fresh vegetable index rose 1.3%. The Dairy & Related Products Index rose 1.9%, the biggest monthly gain since April 2011. And the index of soft drinks rose in February by 1.6%.
U.S. gasoline prices have been on the rise since Russia launched its first military strikes on Ukraine on Feb. 24, and on Thursday the average gas price in Utah jumped 11 cents to $4.30 a gallon, surpassing the previous all-time high of $4. $22, established in 2008. .
How does inflation affect Utah?
Last month, a Deseret News/Hinckley Policy Institute poll found inflation to be Utah’s No. 1 economic concern, with 50% of respondents rating it as their most pressing financial concern. Housing costs were the next biggest economic problem, with 27% placing the highest bills on them.
And when it comes to identifying their spending pain points amid widespread price increases, Utahs have ranked food and housing almost up to their necks as the most problematic.
34% of survey participants named food as their main item of expenditure amid rising inflation, housing costs ranked first with 32% of respondents, and gasoline prices were in third place with 12%. Health care spending is also in the top four, with 11% of those surveyed citing it as their #1 concern.
Phil Dean, former director of state budget and senior fellow at the Kem Gardner Policy Institute at the University of Utah, analyzed the February survey data and said that Utah consumers are facing wide-ranging price increases, especially for basic life necessities. And those in the lower income state feel that the cost increases the most.
“The survey results don’t surprise me,” Dean said. “This only confirms that inflation is a serious problem that now occupies the minds of people.
“Housing costs, gas prices, groceries. This is what we pay for every day, and it is this increase that will hit low-income Utah residents the hardest.”
That happened to Ogden resident Jessica Williams, who said she was amazed at how quickly food prices have risen in recent months.
“It seems like every time I go to the store, things on my list get bigger,” Williams said. “Even if I just bought them, like in the last couple of weeks.”
Williams said she and her family save by looking for discounted items and looking for promo codes online or using coupons.
“Honestly, I’ve never used grocery store coupons before, but now I’m looking for deals and codes online,” Williams said.
National implications
For most Americans, inflation is far outstripping the pay rise many received last year, making it increasingly difficult for them to afford basic necessities like food, gas and rent.
As a result, inflation has become a major political threat to President Joe Biden and Democrats in Congress as the midterm elections approach. Small business representatives say in polls that this is also their main economic concern.
In an effort to halt rising inflation, the Federal Reserve intends to raise interest rates several times this year, starting with a quarter-point hike next week. However, the Fed faces a delicate task: if it tightens credit too aggressively this year, it risks derailing the economy and possibly sparking a recession.
Lydia Bussour, an economist at Oxford Economics, has calculated that if oil stays at $120 a barrel until the end of this year (and it peaked and then fell on Tuesday), it would cost US households an average of $1,500. It would also dampen economic growth by about 0.8 percentage points this year, she said. Many economists have cut their growth estimates for 2022 by about half a point to about 2.5%.
A group of Utah business leaders and economists met earlier this week to discuss how the ongoing Russian military aggression against Ukraine and the resulting global economic repercussions could affect Utah residents and businesses. Their general consensus is that while Utah’s diverse and highly efficient economy is better suited to weather the effects of conflict, further increases in the prices of goods and services are a likely scenario.
Participation: Associated Press