The Personal Consumption Expenditure Index Climed 6.4 Percent in February

Inflation continued to run at the fastest pace in 40 years in February, fresh data released on Thursday showed, at a moment when war in Ukraine and continued supply chain disruptions tied to the coronavirus promise to keep prices rising.

Prices, as measured by the Personal Consumption Expenditures Index, rose by 6.4 percent in the year through February, the fastest inflation rate since 1982. They climbed 5.4 percent after stripping out food and fuel costs, which can be volatile, the data showed.

That pace of increase is far faster than the 2 percent annual inflation that the Federal Reserve targets. While central bankers expect today’s rapid inflation to cool by the end of the year, falling to 4.3 percent by the final three months of 2022, that pace of increase would still be too quick for comfort.

Central bankers began raising interest rates earlier this month, lifting them by a quarter percentage point, and have signaled more to come as they begin to wage an assault on rising prices. By making borrowing more expensive, the Fed can weigh on demand, allowing supply to catch up and eventually temper price increases.

“There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability,” Jerome H. Powell, the Fed chair, said during a recent speech.

The Personal Consumption Expenditures figures follow a more timely inflation release — the Consumer Price Index — and tend to be easy to forecast, so they do not come as a surprise to Wall Street. But because the gauge is the Fed’s preferred inflation measure, the fresh figures reinforce the challenge that economic officials face.

While policymakers are watching for any sign that inflation is slowing down or is about to cool off, so far there is little to suggest a meaningful pullback. Supply chains remained stressed, and recent shutdowns in China could pose further strain. Apartment rents are climbing, elevating housing costs. Workers are in short supply and wages are rising, which could bolster inflation in other service categories.

Russia’s invasion of Ukraine pushed up oil and gas prices, along with other commodity costs, which is likely to further elevate inflation when March data are released. While a few days of gas price increases happened in February, the bulk of them came this month.

Companies are trying to navigate the complicated moment, gauging whether input cost increases will continue for a second year — and whether and how to pass that on to consumers.

Chewy, the pet goods retailer, recently signed a new freight contract that will cost it more this year; and in the final quarter of 2021, it also faced higher labor costs. But it is hoping that those trends do not last, or that it can offset the climbing expenses through efficiencies.

“As we close the book on 2021 and move forward in 2022, we are already seeing improvements in labor availability, inbound shipping costs and pricing, while out-of-stock levels and outbound shipping costs remain elevated,” Sumit Singh, the firm’s chief executive officer, said on an earnings call this week. “Ultimately, we believe most of these challenges are not permanent in nature.”

Other companies have been expecting consumer demand to face some challenges this year, as households get past the government stimulus checks that boosted their spending ability in 2021.

“For our business in the industry we’re in, the stimulus checks are a short-term impact from last year,” Jon Barker, chief executive officer at Sportsman’s Warehouse, said on a March 29 earnings call. “And while fuel costs and inflation will certainly have an impact on disposable income for our consumer, we actually believe and are confident that our industry is more — is able to weather those changes better than most.”

Household balance sheets are still in decent shape even as some support payments lapse. Many people paid down debt during the pandemic, and others are seeing pay gains that could help them to sustain spending in the months ahead. Households across the income spectrum built up savings during the pandemic, partly thanks to the government relief payments.

For the White House and Democrats, inflation is a political liability headed into midterm elections that have the potential to cost them control of Congress. Consumer sentiment and voter approval ratings have both swooned as prices have risen.

President Biden is considering a plan to release one million barrels of oil a day from the Strategic Petroleum Reserve for as long as 180 days, according to a person familiar with the plan, which would add a large amount of oil to the global market in an effort to blunt price increases as the pump tied to Russia’s invasion of Ukraine.

Bloomberg first reported news of the anticipated release.

The president’s public schedule, released Wednesday, said he would give remarks Thursday afternoon on the administration’s “actions to reduce the impact of Putin’s price hike on energy prices and lower gas prices at the pump for American families.”