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Inflation and Prices

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The Consumer Price Index (CPI) jumped an annualized 4% in February, well above its recent trend of about 2 1/2%. Virtually all of the month’s retail price acceleration came from energy prices, particularly gasoline. The highly volatile energy sector has caused wide fluctuations in U.S. households’ monthly cost of living over the past several years. Between late 1999 and early 2001, for example, inflation in the prices of petroleum products rose to a peak of more than 50% before plunging downward last year, at times showing declines of more than 20%. These large swings in energy costs have certainly been the major contributor to acceleration—then deceleration—of the CPI’s growth rate during the period. And it appears that energy prices are once again helping to propel the CPI upward. Over the past 12 months, home fuel oil prices have risen about 20%, and gasoline prices about 30%.

Suggested citation: "Inflation and Prices," Federal Reserve Bank of Cleveland, Economic Trends, no. 03-03, pp. 02-03, 03.01.2003.

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