Inflation slightly cooled again last month but is still running at a high pace, according to new data out Tuesday, continuing to cause fears about what months of unrelenting high costs for consumers means along other financial pressures.
The Consumer Price Index (CPI) for all items rose 6 percent for the 12 months ending in February, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported March 14. That's down from the 6.4 percent annual gain seen in January.
On a monthly basis, the CPI rose 0.4 percent in February, seasonally adjusted, after increasing 0.5 percent in January.
Shelter was the largest contributor to the monthly all items increase, accounting for more than 70 percent of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing, the BLS said. The food index increased 0.4 percent over the month with the food at home index rising 0.3 percent. The energy index decreased 0.6 percent over the month as the natural gas and fuel oil indexes both declined.
Core inflation, excluding food and energy, rose 0.5 percent in February after rising 0.4 percent in January, the BLS said.
The latest CPI indicates that inflation is still extremely problematic, which has significant implications for employees: Persistent inflation has taken its toll on most factors of employees' lives, including their emergency savings, retirement contributions, and mental health. And of course it's taken a hit on their daily finances, with take-home pay being stretched thin as workers shell out more money for housing, groceries, medical bills, gas and other expenses.
Meanwhile, real average hourly earnings decreased 1.3 percent, seasonally adjusted, from February 2022 to February 2023, the BLS reported separately Tuesday. The change in real average hourly earnings combined with a decrease of 0.6 percent in the average workweek resulted in a 1.9-percent decrease in real average weekly earnings over this period.
The CPI comes amid other financial pressures. Silicon Valley Bank, America's 16th largest commercial bank, collapsed quickly Friday, causing fears among investors about whether a broader banking meltdown is imminent.
Although the cost of living has cooled over the past few months year-over-year, the change has yet not made a noticeable difference yet on workers' well-being.
"We don't feel a sense of control over this inflation," Paula Allen, global leader of research and total well-being at Telus Health, a Vancouver, British Columbia-based health care firm, recently told SHRM Online. "This financial risk impacts our mental health: Are we going to pay for groceries? Do we need to cut back on health expenses? It's not a small thing. It erodes our emergency savings as well, which is a big thing—having that cushion is a big, big thing for mental well-being."
More than one-third (36 percent) of employees are concerned about inflation, and 14 percent are concerned about a recession, according to data from Telus Health, which compiles a monthly mental health index to gauge how employees are feeling. Its latest index surveyed 5,000 U.S. workers.