Consumer prices are rising at their fastest pace in decades, and that inflation has been most acute in household staple items like food, housing and transportation, making it hard to escape the budgetary sting.
The Department of Labor said the Consumer Price Index increased 7.9% in February, the largest 12-month increase since 1982.
The basket of goods and services is measured by the index. A year ago, a $100 basket would cost $107.90 today.
The Labor Department said that shelter, gasoline and food were the main contributors to the increase in overall prices in February. The price index increased over the month.
The three largest components of household budgets in 2020 were the categories. According to the most recent Labor Department data, they accounted for more than half of the total expenses.
Greg McBride is the chief financial analyst for Bankrate.
He said that inflation is most pronounced on items that are necessities.
Public transit costs and vehicle purchases are included in the broader transportation category. Over the last year, car sales have increased.
Personal Finance shows how to save money at the grocery store as food prices rise.
Inflation does not impact all consumers equally. A consumer who works from home or uses public transportation may feel less affected by higher gas prices than a consumer who works from a car. The sting of higher prices has been reduced by the fact that American workers have gotten big raises in the past year.
The Federal Reserve is expected to raise interest rates next week.
The largest jump in household grocery bills in more than 30 years occurred in the last 12 months.
Costs for all major food groups increased in February; dairy and fruits and vegetables saw prices rise at their fastest monthly pace in over a decade.
The price of gasoline has gone up in the last year. The recent run-up due to Russia's invasion of Ukraine, which pushed prices at the pump to more than $4 a gallon, on average, on Sunday, doesn't count.
On an annual basis, energy costs are up the most since July 1981
Rents are up 4.7% in the last year, the most since 1991. Housing costs account for more than a third of the average household budget and the percentage increase was smaller than other categories.
That relatively benign increase is likely to put the biggest squeeze on household budgets for the remainder of the year.
A 5% increase in a $1,000-a-month apartment lease is more money than a 20% increase in something that costs $5. A lease locks in the price over a fixed term.
In the spring of 2021, inflation began to rise.
After staying home for months to reduce the spread of Covid-19, consumers had a lot of demand. Households had a lot of cash and were able to spend it on things like entertainment and travel, but they couldn't because they couldn't afford it.
Supply lines are already affected by virus-related disruptions. The prices were initially concentrated in a few categories. The phenomenon was thought to be temporary.
Inflation has persisted. According to financial experts, costs may rise even faster in the next few months.
That is likely to be true of gasoline and other categories negatively affected by the war in Ukraine. The supply-chain snarl may be worsened by the economic consequences of the conflict, according to the chief investment officer of private wealth at Glenmede Trust Company.
He thinks prices will rise 4% to 5% annually by the end of the year.
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