US consumer prices were up 7.9 percent in the year to February, indicating the fastest inflationary growth in four decades, the US Labor Department announced on Thursday. 

In the year to January, US consumer prices rose by 7.5%, which was also a 40-year high. 

"The all items index rose 7.9 percent for the 12 months ending February," the department mentioned in a news release, referring to the Consumer Price Index for All Urban Consumers.

Prices increase the highest since 1982

According to the press release "The 12-month increase has been steadily rising and is now the largest since the period ending January 1982."
 
For February alone, the indicator showed a 0.8 percent growth from January. 
 
The Consumer Price Index for All Urban Consumers, known in short as CPI, is among the indicators watched by the Federal Reserve to determine the timing for its first pandemic-era interest rate hike. 
 
The Federal Reserve dropped interest rates to virtually zero after the outbreak of the COVID-19 pandemic in March 2020, keeping them at between zero and 0.25 percent.

Series of rate hikes

The US Central Bank is preparing for a series of rate hikes this year, with the first expected as early as next week at the March 15-16 meeting of its policy-making Federal Open Market Committee. 
 
Federal Reserve bankers believe such rate hikes are necessary to counter runaway inflation experienced since last year. The central bank’s tolerance for inflation is a mere 2 percent a year. 
 
After slashing interest rates to near zero, the Federal Reserve provided stimulus of more than $2 trillion over the past two years to ensure enough money to sustain credit markets.

On top of that, the federal government spent trillions of dollars more on pandemic relief measures, while employers paid out higher wages to working Americans. 
 
All that money, along with supply chain bottlenecks arising from the pandemic, has created soaring inflation as the economy grew 5.7 percent last year after a 3.5% contraction in 2020.