Inflation reached a new 40-year high — even before the big spike in gas prices
AILSA CHANG, HOST:
Americans continue to pay more for just about everything, from hamburgers to hockey tickets. Today we learned that inflation hit another four-decade high in February, and that was before the big spike in gasoline prices following Russia's invasion of Ukraine. For people living paycheck to paycheck, rising inflation can mean tough choices about what to do without, as NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Cami Bencomo runs a coffee delivery company with her husband in Las Cruces, N.M. They used to sell brewed coffee from a trailer shaped like a big coffee cup. But during the pandemic, they've just been delivering coffee beans they roast to their loyal customers, which is less profitable and requires more driving. Bencomo, who has a 2-year-old daughter and another baby on the way, says money has been tight, and the rising price of food and fuel isn't helping.
CAMI BENCOMO: We're good at stretching the minute dollars we have, but we're feeling the breaking point.
HORSLEY: Consumer prices in February were up 7.9% from a year ago. That's the sharpest increase since the beginning of 1982. Gasoline prices accounted for about a third of the increase between January and February, and March inflation could be even higher now that Russian troops have invaded Ukraine.
AAA says gasoline prices reached an all-time high of 432 a gallon today, up 59 cents in just the last week. An alert Bencomo sent her husband to fill their gas tank. By the time he reached the station, the price had already ratcheted higher.
BENCOMO: There's no understanding of how far up the prices are going to go. And we live in a place where we are dependent on a vehicle to, at a very minimum, go get our groceries. We can stay home for a lot of stuff, but we have to have gas to deliver coffee. We have to have gas to get food.
HORSLEY: And the price hikes don't stop once you park your car at the supermarket. Grocery prices rose faster last month than at any time since the beginning of the pandemic.
Kim Gonzales has been forced to trade down to generic cereal from the Honey Bunches of Oats she likes. She's also careful about buying fresh fruits and vegetables since their price hike last month was the sharpest in almost a dozen years.
KIM GONZALES: One of our grocery stores does have, like, a discounted produce for blemished produce, so that helps.
HORSLEY: It's hard to substitute for pricy gasoline, though. Gonzales, who works as a medical assistant in Livingston, Mont., drives a 1999 Toyota pickup that gets just 16 miles to the gallon.
GONZALES: Here, it's helpful to have a vehicle that has four-wheel drive because, you know, we do get the snow. We do get the blowing snow. Those types of vehicles - they're not always the most fuel-efficient.
HORSLEY: While food and fuel costs have been among the big drivers of inflation in the last year, price hikes are spreading throughout the economy. Airfares rose last month as more people felt safe traveling. Rent is also up.
Inflation's hardest on families who have little income to spare. Wealthy Americans, many of whom socked away savings during the pandemic, continue to spend freely. With a shortage of parts and people, businesses are having a hard time keeping up with that robust demand, and that imbalance is a recipe for rising prices.
Federal Reserve Chairman Jerome Powell told lawmakers last week the central bank will start raising interest rates next week in an effort to cool off demand and bring inflation under control. But the war in Ukraine has made the Fed's job even more challenging as it tries to tame inflation without tipping the economy into recession.
(SOUNDBITE OF ARCHIVED RECORDING)
JEROME POWELL: Given the current situation, we need to move carefully, and we will.
HORSLEY: Powell said the Fed doesn't want to add any more uncertainty to the economy. Bencomo has enough uncertainty already as she tries to stretch her family's limited budget to cover expenses that keep going up month after month.
BENCOMO: I feel the pinch. If we weren't watching every dollar the way we are, I'm sure that we would be, like many families, blowing through it and wondering, what are we going to do? How are we going to make this work?
HORSLEY: Scott Horsley, NPR News, Washington.
(SOUNDBITE OF KIASMOS' "SWAYED") Transcript provided by NPR, Copyright NPR.