Consumers are also paying more for many goods: the overall annual inflation rate in February reached 7.9 percent, according to data released last week by the Federal Bureau of Economic Analysis.
Last year’s growth was 16 percent for beef, 12 percent for flour, 19 percent for bacon and 11 percent for milk. Energy spending rose 25 percent – excluding recent gas increases – and used cars rose 41 percent. Clothing, footwear and services increased from 4 to 7 percent.
This is comparable to the 2 percent inflation target set by the Federal Reserve.
Economists and the Federal Reserve do not consider food and energy spending as key indicators of inflation. The so-called “core inflation” of all other spending reached 6.4 percent in February, approaching 6.3 percent, according to University of Michigan economists. predicted that month.
But the rate hike, which began on Wednesday, should cut it to an average of 5.5 percent a year, they said.
“As the Fed raises rates, supply chains stabilize and demand cools,” UM’s latest forecast said.
The housing industry is already experiencing rising mortgage rates due to inflation and the invasion, according to the National Mortgage Bankers Association. The increase is likely to continue with the rate increase.
According to the MBA, the 30-year fixed-rate mortgage rose last week to 4.27 percent – the highest since May 2019. Now the rates are about a percentage higher than a year ago.
Last week, the number of new mortgage applications decreased by 1 percent compared to the previous week, and the number of refinancing applications – by 3 percent.
Low mortgage rates “offset high prices,” the UM report said. As a result, availability “will deteriorate significantly over the next two years.”
Builders in Michigan are already looking to increase construction costs this year after prices for products such as wood, cement and other products have already risen over the year.