Prices for common goods in the US economy continued an upward trend in February. The consumer price index, a key indicator of inflation, rose 0.5% during February, according to statistics [.pdf] released today from the Labor Department. This is not only the eighth consecutive month with an increase in the costs of goods, but also the greatest monthly increase since June 2009. Similar to January, price rises in gasoline and food fueled most of the monthly increase.
In fifteen of the last sixteen weeks, the average price for a gallon of gasoline increased. While there is a broad trend for higher gas prices, the growing turmoil in Libya within the past month has accelerated price increases. In the past four weeks, the average price for a gallon of gas has risen eleven cents per week, whereas the previous twelve weeks averaged a two cent rise per week. During the week ending March 14th, a gallon of gas averaged $3.62, according to the US Energy Administration.
Altogether, the energy index increased 3.4% during February. This is the eighth consecutive month with an increase in the energy index, which includes gasoline and energy utilities. In the past three months, the energy index has risen nearly 10%, reflecting the broad trend of higher energy prices.
Rising prices in the energy sector are particularly worrisome because they increase operating costs for consumers, as well as producers. In fact, the cost to produce all goods increased 1.6% in February, according to the producer price index [.pdf]. This is the greatest increase in the producer index since November 2007 or in forty months.
The energy sector was among the rising production costs with a 3.3% increase during February. This is the fifth consecutive month with an increase in the cost to produce energy, as well as the greatest monthly rise since January 2010. Production costs of food also increased in February, with a sharp rise of 3.9%. This is the greatest monthly rise in food production since November 1974.
Consumers also had a sharp rise in food costs during February. Food prices rose 0.6% in February, which is the greatest monthly rise since September 2008. Every one of fourteen major food categories had higher prices in February, except for cereal and bakery products, which had no change. Fruits and vegetables rose 2.2%, meats & dairies rose 1.2%, and fats and oils rose 0.9%.
Aside from food and energy price rises, other consumer goods with notable changes in February include: new vehicles with a 1% increase, medical care commodities with a 0.7% increase, and airline fares with a 2.1% increase. Airline fares have risen six consecutive months, with the last four months each being 2.0% or more. Higher airline fares are clearly associated with higher energy costs.
With price rises among many consumer goods, as well as higher production costs for businesses, the US economy is spending more on common goods in 2011. Considering the climbing trend of energy prices, March will likely bring similar increases.