Inflation Burns Even Hotter, Rising to 7.9%

What Thursday’s Economic Reports Tell Us

Surprised black man looks at receipt total with food in mall.

Elena Perova / Getty Images

The inflation rate accelerated yet again in February, while initial jobless claims rose slightly for the first time in three weeks, reports showed Thursday.

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

Consumer Price Index 

  • The inflation rate accelerated yet again, reaching 7.9% in February, a fresh high since 1982. That means consumer prices were 7.9% higher this February than last February, and that’s because they rose 0.8% during the month—the fastest pace in four months. In January, the inflation rate was 7.5%.
  • Gasoline was one of the largest contributors to the February uptick, the Bureau of Labor Statistics said, and that was before the most recent spike caused by the Russian invasion of Ukraine. Higher food and housing prices were also major factors, though items in most spending categories got more expensive.
  • The “core” inflation rate, which excludes food and energy prices, rose to 6.4% from 6% in January. 
  • The Federal Reserve pays close attention to measures of inflation, particularly core inflation, when setting its benchmark interest rate. Economists said the new data gives the Fed even more reason to raise that rate when it meets next week. Higher borrowing costs tend to discourage consumer spending and demand for goods and services, lowering inflation. 

Real Earnings

  • Inflation clobbered workers’ buying power in February, as prices rose but pay stayed virtually flat, the Bureau of Labor Statistics said in a separate report. “Real” hourly earnings, which factor in the impact of inflation, fell 0.8%, the most for a single month since June 2020.
  • Even though average wages have risen rapidly amid a shortage of workers, they’re not keeping up with soaring inflation. Over the past year, wages have risen 5.1%, but when inflation is factored in, they’ve effectively fallen 2.6%.

Initial Unemployment Claims 

  • There were 227,000 new claims for unemployment benefits last week, slightly higher than the 216,000 the week before, and the first increase in three weeks, the Department of Labor reported.
  • The weekly data is a way of gauging the trend in layoffs around the country, and despite the uptick, the numbers are still comfortably within the typical range seen before the pandemic struck. Volumes returned to more normal levels late last year after surging in the pandemic economy. (There were more than 6 million initial claims at one point right after lockdowns in April 2020.) Economists said layoffs should continue to be minimal because there are still near-record high volumes of job openings.

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  1. Bureau of Labor Statistics. “Consumer Price Index Summary - 2022 M02 Results.”

  2. Bureau of Labor Statistics. “Real Earnings Summary - 2022 M01 Results.”

  3. Department of Labor. “News Release.”

  4. FRED Economic Data. “Initial Claims (ICSA).”

  5. Moody’s Analytics. “Jobless Claims.”

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