Prices have begun to climb for U.S. consumers as coronavirus recovery efforts continue at full steam, leading some experts to worry about inflation.
The consumer price index climbed 0.4% during the month of February, according to the U.S. Bureau of Labor Statistics. The consumer price index is measured by prices that consumers pay for specific goods, such as food, clothing, and recreational activities.
Rising gas and energy prices are in part to blame for the upswing as increased production costs are often passed along to consumers. Gasoline prices saw a 6.4% climb over the past month, a recovery sign for a long ailing industry, while electricity and natural gas prices saw a 3.9% climb.
Prices for other goods calculated in the consumer price index either remained flat or fell. New vehicle prices remained flat while used vehicle prices declined for the fourth month in a row. Apparel and medical care costs continued to fall.
Economists and other experts, such as former Treasury Secretary Lawrence Summers, have warned that the latest coronavirus stimulus measures could contribute to rising inflation. In the Washington Post, Summers wrote that the Biden administration’s proposed $1.9 trillion relief effort, which is expected to pass, could “set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
Annual inflation also rose by 1.7%, on a non-seasonally adjusted basis, in the year ending in February, according to the Wall Street Journal.
The modest increase in inflation in recent weeks can be credited to an increase in energy consumption during the winter month and increased demand for goods and services. Much of the latter has been credited to declining coronavirus cases, increased household spending, stimulus checks boosting household savings, and numerous states lifting their coronavirus restrictions.
It is worth noting that others, including Manhattan Institute senior scholar Oren Cass, have sounded the alarm on the impacts of inflation for quite some time.
“The core challenge with measuring inflation is discovering what counts,” Cass explained in a Consumers’ Research webinar hosted last month.
Cass said high pressure costs affecting most Americans are not reflected in the research and discussion of most economists.
“If you ask families what costs are concerning, they would say that healthcare is rising at 12% and college is costing $150,000 per year,” he added.
In February 2020, Cass published a report detailing some of the calculation’s shortcomings and developing his own inflationary measure, the Cost of Thriving Index, at the Manhattan Institute. The Cost of Thriving Index highlights the costs of four goods: a 3-bedroom home, a car, a health insurance plan, and a family cell phone plan.
As a result of his research, Cass believes that policymakers and consumers feel more comfortable making the argument that life is becoming more and more expensive.
