By: The Working Forest Staff
NAHB — Consumer prices continued to break 40-year highs in February due to higher food, gasoline, and housing costs. This was the largest year-over-year gain since January 1982. This pace of inflation will likely stay high in the months ahead as the Russia-Ukraine crisis continues to drive up oil and commodity prices.
The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.8% in February on a seasonally adjusted basis, following an increase of 0.6% in January. Excluding the volatile food and energy components, the “core” CPI increased by 0.5% in February, following an increase of 0.6% in January. This is the fifth straight month that it has increased by at least 0.5%. The price index for a broad set of energy sources rose by 3.5% in February, and the food index increased by 1.0% in February.
In February, the indexes for gasoline, shelter, and food were the largest contributors to the increase in the headline CPI. The gasoline index rose by 6.6% in February and accounted for almost a third of the headline CPI increase. Meanwhile, the food index rose by 1.0% as the food at home index rose 1.4 percent; both were the largest monthly increases since April 2020.
The index for shelter made up more than 40% of the “core” CPI, which rose by 0.5% in February. The indexes for owners’ equivalent rent (OER) increased by 0.4% and rent of primary residence (RPR) rose by 0.6% over the month. Monthly increases in OER have averaged 0.4% over the last three months. More cost increases are coming from this category, which will add to inflationary forces in the months ahead.
During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 7.9% in February, following a 7.5% increase in January. The “core” CPI increased by 6.4% over the past twelve months, following a 6.0% increase in January. It was the largest annual growth since August 1982. The food index rose by 7.9%, the largest annual increase since July 1981, and the energy index climbed by 25.6% over the past twelve months.
NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).
The Real Rent Index rose by 0.1% in February, after staying unchanged in January. Over the first two months of 2022, the monthly change of the Real Rent Index remained virtually unchanged, on average.
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