Inflation likely was elevated last month even before the spike in oil and gas prices of the past two weeks that is expected to send consumer costs soaring in the months ahead.
Consumer prices are forecast to have risen 2.5% in February from a year earlier when the Labour Department reports last month’s figures Wednesday, according to a survey of economists by data provider FactSet. That would be up slightly from 2.4% in the previous month. Core prices, which exclude the volatile food and energy categories, are expected to have also risen 2.5% in February, matching January’s figure for the lowest in five years.
But the data will represent an already-faded snapshot of inflation before the Iran war was launched Feb. 28, which has caused violent gyrations in oil prices as shipping lanes through the Persian Gulf have suffered a rare shutdown. Gas prices have already jumped and are expected to push inflation much higher when March figures are released next month.
The price spike will unnerve the inflation fighters at the Federal Reserve and could slow consumer spending and weigh on the broader economy. The increase could be a one-time event and potentially reverse if the war ends soon, as President Donald Trump has hinted. But the spike in gas prices threatens to worsen inflation for at least a few months even as Americans are already weary from nearly five years of stubbornly high prices that have made “affordability” a thorny political issue for congressional Republicans who will soon face voters in midterm elections later this year.
