Energy prices were one of the main drivers of February's surprising rise in inflation.
Headline inflation rose 0.4% from last month and 3.2% from last year, according to data released by the Bureau of Labor Statistics on Tuesday. Gasoline and housing together accounted for more than 60% of the increase in the Consumer Price Index (CPI) in February, the BLS said in its report.
The gasoline index rose 3.8% from the previous month, a sharp reversal from January's 3.3% decline. The BLS noted that gasoline prices rose 4.3% in February before seasonally adjustments.
Due to these energy increases, demand in February increased by 0.3% month-on-month in January, accelerating from the annual rate of increase of 3.1%.
As we head into spring, gas prices tend to rise as driving season begins and hibernation ends.
Retail prices for pumps began a downward trend in late January, rising along with crude oil prices. Gasoline prices have risen sharply over the past few weeks due to recent refinery constraints and fluctuating oil prices.
The national average gas price on Tuesday was $3.20, up $0.20 from a month ago, according to AAA data.
All components of the energy index rose last month, rising 2.3% in February after falling 0.9% the previous month.
Individually, natural gas prices rose 2.3% from the previous month, electricity prices rose 0.3%, and heavy oil prices rose 1.1%.
Despite February's gains, looking at the big picture, the energy index is down 1.9% over the past year. And on a year-on-year basis, all components decreased except for electricity, which increased by 3.9%.
U.S. crude oil futures rose in February and reached 2024 highs of just over $80 a barrel in early March. Prices are off peak.
On Tuesday, West Texas Intermediate (CL=F) was trading just above the $77/barrel level, while international benchmark price Brent (BZ=F) was trading at $83/barrel. is trading below.
Oil alliance OPEC+ extended its production cut of 2.2 million yen per day into the second quarter. Contract prices rose in the last two weeks of February on expectations that the cartel would continue to cut prices.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X @ines_ferre.
