Housing costs are one of the top three categories causing inflation in the U.S. to surge, the U.S. Department of Labor announced Thursday. The largest items in households’ budgets—shelter, gasoline, and food—were the main culprits in February that fueled the highest inflation rates since 1982.
The Consumer Price Index, which measures price fluctuations in goods and services, increased 7.9% in February compared to a year earlier.
“There’s nowhere to hide,” Greg McBride, chief financial analyst for Bankrate, told CNBC. “This is hitting everybody … [with inflation] most pronounced on items that are necessities.”
Household grocery bills increased 8.6% over the last year; that is the fastest pace since 1981. Gasoline prices are up 38% compared to a year ago, although that statistic does not reflect the latest increases at the pump following Russia’s invasion of Ukraine.
Shelter costs such as rents are up 4.7% compared to last year. That is the highest since May 1991. “That comparatively benign increase … is likely to put the biggest squeeze on household budgets for the remainder of the year,” McBride told CNBC. Housing comprises more than a third of households’ average budgets.
Also, mortgage rates rose this week in response to higher inflation, averaging 3.85%, Freddie Mac reports.
“While it’s too soon to know how the war in Ukraine will affect the U.S. economy, it seems that it will continue to put upward pressure on inflation,” Nadia Evanelou, senior economist and director of forecasting at the National Association of REALTORS®, writes on the association’s blog.
In an attempt to try to tame inflation, the Federal Reserve is expected to start raising its short-term interest rates next week.