US consumer prices rose in February at their fastest pace in more than three years, a jump driven largely by surging gasoline costs.
Gas-pump costs surged 9 percent in the month, according to the Labor Department data released Friday.
That pushed the department’s consumer price index (CPI) up 0.7 percent for the month, its biggest one-month change since June 2009. Back then, in the month just before the nation officially emerged from recession, a big jump in the price index also stemmed from a spike in gas-pump prices.
The good news is that gas prices have eased since the February survey.
“The consumer price outlook looks relatively modest,” said Chris Christopher, an economist at the forecasting firm IHS Global Insight in Lexington, Mass. “Pump prices are expected to fall and food price increases seem well under control.”
Tamer prices ahead would be welcome news, since American workers are still digesting a 2 percent hike in payroll taxes, after a temporary tax cut expired in January.
As of Friday, the average cost of regular gasoline is $3.70 per gallon, according to AAA’s daily fuel gauge report. That’s down a bit from a week ago, but up 8 cents over the past month.
Partly due to gas prices, consumer confidence also took a hit in a separate report released Friday. The Reuters/University of Michigan index of consumer sentiment fell nearly 6 points in mid-March to a level of 71.8.
That follows a similar trend seen in a Christian Science Monitor/TIPP poll at the beginning of the month, where an index of economic optimism declined.
Beyond gas prices, consumer spirits may have been affected by political sparring in Washington over fiscal policy.
Another big challenge is that worker pay is barely keeping pace with inflation. In a separate Friday report, the Labor Department said that average hourly earnings of $23.82 are up only a penny over the past year after adjusting for inflation.
Despite February’s big one-month increase in consumer prices, the CPI data don’t point to big inflation pressures. The overall price index is up 2 percent over the past year.
Two percent is also the one-year change in a “core price index,” which is the CPI with food and energy prices stripped out.
Federal Reserve policymakers have said they want consumer-price inflation at about that level – not too high but enough to provide an insurance policy against deflation that could harm economic confidence. The Fed has defended its ongoing monetary stimulus policies by noting that unemployment remains high, and so far consumer prices remain under control.
Critics say the Fed and other central banks are pumping too much money into the global economy in their stimulus efforts, risking price bubbles in areas ranging from energy to the stock market.
The CPI index is based on tracking the prices of many goods and services that households buy.
Since the recession ended in mid-2009, the index is up 8.4 percent.
Price gains over that time have been larger in some areas, notably gas (55 percent), air fares (24 percent), milk (22 percent), used cars (21 percent), college tuition and fees (19 percent), and medical services (12 percent).
Some major components of the index have had smaller gains (housing and rent, clothing, electricity), while other components have seen prices fall since mid-2009 (toys, furniture, major appliances).