By Nathalie Voit

The Consumer Price Index (CPI) surged 7.9% year-over-year in February, the largest annual increase in over four decades, the Department of Labor (DOL) said in a news release on March 10.

The all-items index rose 7.9% in the twelve months ending in February, driven by increases in gasoline, food, and rent indexes. The growing costs of everyday basics helped push inflation to a new 40-year high. The 12-month increase in prices is now the largest since January 1982, the department’s Bureau of Labor Statistics reported on Thursday.

The energy index rose a staggering 25.6% over the past year, driven by a 38.0% increase in the cost of gasoline and a 23.8% premium in the index for natural gas. The food index spiked 7.9%, the fastest year-over-year increase since July 1981. The index for shelter rose 4.7%, while the indexes for used cars and trucks (+41.2%), new vehicles (+12.4%), and airline fares (+12.7%) surged over the year, according to the DOL report.

Excluding food and energy, core inflation soared 6.4%, the largest 12-month change since August 1982, the department said.

Month-over-month, the all-items index rose 0.8% in February after increasing 0.6% over the previous month. February’s red-hot CPI reading was driven by increases in the index for gasoline (+6.6%), which accounted for nearly one-third of the all-items monthly increase.

Surging gasoline prices helped push the energy index 3.5% higher in February, following a 0.9% rise in January. The index for food grew 1.0% over the month as the food at home index climbed 1.4%, the largest monthly gains since April 2020, according to the DOL.

Core inflation rose 0.5% in February, driven by an increase in the index for shelter (+0.5%). The department said that shelter costs accelerated at their fastest annual pace since May 1991.

Other indexes also contributed to the increase, including those for recreation (+0.7%), apparel (0.7%), household furnishings and operations (0.6%), motor vehicle insurance (1.2%), personal care (1.2%), transportation services (1.4%), and airline fares (5.2), the DOL said. 

Both annual and month-to-month headline inflation fared slightly worse than the Dow Jones consensus. Wall Street analysts had forecast a headline inflation reading of 7.8% for the year and 0.7% for the month, according to CNBC.

The news comes amid record-breaking prices at the pumps, which on March 8 broke a 14-year record and became the most expensive in U.S. history.

As of March 10, the cost of a regular gallon of unleaded gasoline in the U.S. is $4.318, up from $4.173 on Tuesday, according to AAA.