He plans to raise prices again in May unless food prices ease further.įor the Fed, it’s not yet clear whether it will keep raising rates at its next meeting to combat inflation. To cover his higher costs, Bhushan raised some of his prices last week after having done so four months ago. He has also had to raise wages by about 30% to attract and keep the workers he needs. Mani Bhushan, who owns four Taco Ocho restaurants in the Dallas area, has struggled to keep up with sharply higher prices for eggs, chicken, flour and black beans. “The decision ultimately will depend not only on the economic data but also financial stability concerns, which could keep the Fed on the sidelines next week.”Īcross the country, persistently high inflation is still pressuring many consumers. economist at High Frequency Economics, said in a research note. “These data support a quarter-point rate hike" at the Fed's meeting next week,” Rubeela Farooqi, chief U.S. The price of eggs, which have soared 55% from a year earlier, actually dropped 6.7% just in February. Food prices rose 0.3% in February, the smallest monthly gain in nearly two years, though they're still up more than 10% from a year ago. Used car prices fell 2.8%, the eighth straight monthly decline.Ĭonsumers are getting a bit of relief at the grocery store. New car prices ticked up just 0.2% for a second straight month. Labor shortages in many services industries have led to sharp wage increases.Ĭlothing costs rose 0.8% last month. The Fed is heavily focused on services, which are labor-intensive and whose price increases are driven in large part by higher wages. Auto insurance jumped 0.9%, hotel costs a dramatic 2.3%.Īir fares, after easing for several months, soared 6.4% just in February and are up 27% from a year ago. Restaurant prices rose 0.6% from January to February. Prices in the economy's sprawling service sector continued to accelerate last month. Such a decline could further slow inflation. But most economists expect rental cost increases to slow in the coming months as more apartment buildings are constructed and new leases are signed at lower price levels. Nearly three-quarters of last month's price increase was driven by housing costs. Core prices in February rose 5.5% from 12 months ago, down slightly from 5.6% in January. Yet it remains far above the Fed’s 2% annual inflation target. In February, consumer prices climbed 6% from 12 months earlier, down from January’s 6.4% year-over-year increase and well below a recent peak of 9.1% in June. When measured against prices a year ago, inflation has been easing for eight months. When the Fed raises its key rate, it typically leads to higher rates on mortgages, auto loans, credit cards and many business loans. That is a sharp shift from just a week ago, when Chair Jerome Powell suggested to a Senate committee that if inflation didn’t cool, the Fed could raise its benchmark interest rate by a substantial half-point at its meeting March 21-22. With the collapse of two large banks since Friday fueling anxiety about other regional banks, the Fed, for now, may focus more on boosting confidence in the financial system than on its long-term drive to tame inflation. The Fed pays particular attention to the core measure as a gauge of underlying inflation pressures.Įven though prices are rising much faster than the Fed wants, some economists expect the central bank to suspend its year-long streak of interest rate hikes when it meets next week. Yet excluding volatile food and energy costs, so-called core prices rose 0.5% in February, slightly above January's 0.4% gain. The government said Tuesday that prices increased 0.4% last month, just below January’s 0.5% rise. consumer price increases eased slightly from January to February but still pointed to an elevated inflation rate that is posing a challenge for the Federal Reserve at a delicate moment for the financial system.
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