Annual inflation in metro Atlanta climbed into double-digits last month, far above the national average, pulled higher by the region’s housing, energy and food costs.
And prices for consumers are seen rising even faster this month, fueled by skyrocketing oil and gas costs following Russia’s recent invasion of Ukraine.
The metro area’s February consumer price index, calculated from a collection of goods and services that typically dominate household spending, was 10.6% higher than a year earlier, the Bureau of Labor Statistics reported Thursday.
Nationally, consumer prices were up 7.9% in the 12 months ended February, with energy prices the main driver. U.S. prices rose 7.0% last year, the biggest increase since 1981.
But last month’s increases only partially captured the mounting economic fallout from Russia’s invasion, which began Feb. 24. Russia is a major global producer of oil and Ukraine is a large global supplier of grains such as wheat.
The average price of gasoline in metro Atlanta has ascended from $3.44 a gallon when the war began to $4.33 a gallon Thursday afternoon, according to GasBuddy, which collects drivers’ information to track prices nationwide.
While there is no telling how long energy prices will be elevated, the impact of the first wave of rising prices is still flowing through the economy, said economist Tom Smith of Emory University’s Goizueta School of Business. “It’s going to get worse before it gets better.”
Even before the Russian war, prices were up, as strong consumer spending on goods combined with global supply chain wrangles that have raised costs. And Atlanta for months has been among the regions with the highest inflation.
In Thursday’s government report, only Phoenix, with an annual inflation rate of 10.9%, had a higher rise in consumer prices than Atlanta among major cities surveyed.
Inflation is higher than the national average in Atlanta for a range of reasons, most boiling down to the basics of supply and demand, Smith said.
Atlanta’s attractiveness to new residents, as well as visitors, has steadily ratcheted up the need for basic services and goods — especially housing, which accounts for about one-third of the index. Both rents and home prices have been rising at double-digit rates.
The inflation report comes as the Federal Reserve’s rate-setting committee prepares to meet next week. Officials have signaled a modest increase in short-term interest rates, intended to raise borrowing costs, dampen inflation and slow the economy slightly.
The higher inflation numbers could increase the pressure on Fed officials to be more aggressive in hiking rates.
But the situation this time isn’t like the late 1970s, when the Fed raised rates to nearly 20% and killed inflation by causing a deep recession that meant layoffs for millions of workers, Smith said.
“This is a different animal,” he said. “The Fed has to decide what it cares about. If it’s low unemployment, then the Fed has to be cautious.”
Higher prices by themselves can be a threat to growth since inflation in necessary goods cuts spending on other things.
Inflation is especially hard on people with fixed incomes, but even working people who’ve been getting healthy pay hikes are generally not seeing wages rise as fast as prices, said Kurt Rankin, senior economist for PNC Financial Services Group.
“Consumer spending faces a tough task in supporting U.S. economic activity in the months to come,” he said.