Inflation Ticks Up in February

After several improvements over the past year, inflation looks to be heating up again, according to the latest government data.

The Consumer Price Index (CPI) for all items rose 3.2 percent for the 12 months ending in February, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported March 12. That’s a hotter reading than expected, and a notch higher than in January, when inflation rose 3.1 percent year over year.

Core inflation—which excludes the more volatile food and energy prices—rose 3.8 percent year-over-year.

On a monthly basis, the CPI rose 0.4 percent in February, seasonally adjusted, after rising 0.3 percent in January.

The jump is largely due to rising gas and shelter prices. The BLS said that combined, these two indexes contributed over 60 percent of the monthly increase in the index for all items.

The Federal Reserve closely watches the CPI report as it determines how and when to cut interest rates, and the renewed creep of inflation will likely be top of mind at the Fed’s next meeting later this month.

The latest CPI report comes on the heels of several reports finding that despite significant improvement from its 40-year peak in summer 2022, inflation is still having an outsized impact on both employees and employers. A recent survey of roughly 2,000 workers found that more than half of workers (53 percent) feel their paychecks are not keeping up with the pace of inflation, while 38 percent of U.S. adults said their overall financial situation is more stressful than it was 12 months ago.

“Americans continue to feel the pain of inflation every time they go to the grocery store or the gas pump,” Richard Wahlquist, chief executive officer at the American Staffing Association, told SHRM Online earlier this month. “And over the past few years, many went into debt to keep up with inflation.”

Employers are suffering from sticker shock, too. Inflation and its impact on their organization’s budget—especially on wages and hiring—continues to be employers’ primary concern, according to the 2023-24 SHRM State of the Workplace Report released Feb. 8. The survey of 2,028 HR leaders found that inflation was overwhelmingly their organization’s top concern of 2023, with 73 percent citing it as such, higher than other top concerns including employee mental health, labor shortages and the economic slowdown.

And an employer survey from Carmel, Ind.-based benefits administration firm Optavise found that organizations are bearing the brunt of rising group health insurance costs, leading half (51 percent) to say that inflation affected which benefits they were able to offer in 2024. Furthermore, several employers indicated they’re considering adding new benefits to their portfolio—including medical options and mental or financial health help—but are finding costs to be the biggest hurdle.

Meanwhile, real average hourly earnings rose 1.1 percent, seasonally adjusted, from February 2023 to February 2024, the BLS reported separately today. The change in real average hourly earnings combined with a decrease of 0.6 percent in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period. Comparatively, real average hourly earnings increased 1.4 percent, seasonally adjusted, from January 2023 to January 2024.