Inflation Rises to 7.9 Percent for February 2022

The price burst presents a challenge for President Biden, especially given that November’s midterm elections are fast approaching. Democrats will need to battle to retain control of Congress at a time when voters are feeling the squeeze of higher expenses. On Thursday, Mr. Biden acknowledged the pain consumers are feeling from rapid inflation but pointed a finger at President Vladimir V. Putin of Russia, blaming his invasion of Ukraine for fueling higher gas prices. Democrats tweeted about the report on Thursday using the hashtag #PutinPriceHike.

“Today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike,” Mr. Biden said in a statement. “As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: The costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing.”

The Ukraine invasion is poised to compound a stubborn inflation problem. Cost increases had been running fast for a year and accelerating for months, posing a problem for the Federal Reserve, which is in charge of achieving price stability. The central bank has signaled it will raise interest rates by a quarter percentage point at its meeting next week, probably the first in a series of moves meant to increase the cost of borrowing and spending money and slow down the economy. By reducing consumption and slowing the labor market, the Fed is able to take some pressure off inflation over time.

Broadening price pressures and high gas costs could become a serious issue for central bank policymakers if they help convince consumers that the run-up in prices will last. If people begin expecting inflation, they may change their behavior in ways that make it more permanent: accepting price increases more readily, and asking for bigger raises to keep up.

“It was another bad report,” said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives. “Inflation was already way too high before the invasion of Ukraine.”

Article source: https://www.nytimes.com/2022/03/10/business/economy/cpi-inflation-february-2022.html