US consumer prices surged in February, culminating in the largest annual increase in 40 years, new figures show today.

US inflation is poised to accelerate further in the months ahead as Russia's war against Ukraine drives up the costs of crude oil and other commodities.

The consumer price index increased 0.8% last month after gaining 0.6% in January, the Labor Department said today.

In the 12 months to February, the consumer price index shot up 7.9%, the biggest year-on-year increase since January 1982.

That followed a 7.5% jump in January and was the fifth month of annual CPI readings north of 6% in a row.

Economists polled by Reuters had forecast the CPI rising 0.8% and vaulting 7.9% on a year-on-year basis.

US inflation has way overshot the Federal Reserve's 2% target and the Fed is expected to start raising interest rates next Wednesday to stamp out inflation, with economists expecting as many as seven rate hikes this year.

Last month's inflation data does not fully capture the spike in oil prices following Russia's invasion of Ukraine on February 24.

Prices shot up more than 30%, with global benchmark Brent hitting a 2008 high at $139 a barrel, before retreating yesterday after reports that the United Arab Emirates would call on fellow OPEC members to boost production.

The US and its allies have imposed harsh sanctions on Moscow, with President Joe Biden on Tuesday banning imports of Russian oil into the country. Russia is the world's second-largest crude oil exporter.

Gasoline prices in the US are averaging a record $4.318 a gallon compared with $3.469 a month ago, AAA data showed.

The Russia-Ukraine war, which has also boosted prices of wheat and other commodities, is seen keeping inflation uncomfortably high into the second quarter.

"Our estimates suggest gasoline and natural gas prices are on track to add over 1 full percentage point or so to overall year-on-year prints in each month over the next ten months," said Kevin Cummins, chief US economist at NatWest Markets in Stamford, Connecticut.

Lower income households bear the brunt of high inflation as they spend more of their income on food and fuel.

Inflation was already a problem before the Russia-Ukraine war, thanks to a shift in spending to goods from services during the Covid-19 pandemic. Trillions of dollars in pandemic relief fired up spending, which ran against capacity constraints as the coronavirus upended the labour market dynamics.

Excluding the volatile food and energy components, US consumer prices increased 0.5% last month after advancing 0.6% in January.

In the 12 months to February, the so-called core CPI raced up 6.4%. That was the largest year-on-year gain since August 1982 and followed a 6% increase in January.

Rising rentals and shortages of goods like cars are fueling the core CPI. Sharply declining coronavirus infections are also seen boosting demand for services including air travel and hotel accommodation, keeping inflation hot.

Before the Russia-Ukraine war, most economists had expected the annual core CPI rate to peak in March just above 6.5% and retreat in April as large increases from last spring started to drop out of the calculation.

"We still think that is the most likely outcome, but there is a risk that energy pass through effects from the latest spike in oil prices will slow that process," said Lou Crandall, chief economist at Wrightson ICAP in Jersey City.

"Exactly how the Fed will balance the impact of higher oil prices on the inflation data against the 'energy tax' hit to incomes and real spending remains unclear," he added.

Tightening labour market conditions will also contribute to higher inflation, despite monthly wage growth stalling in February.

There were a near record 11.3 million job openings at the end of January. The jobs-workers gap was 4.8 million, accounting for 2.9% of the labour force.

A separate report from the Labor Department today showed initial claims for state unemployment benefits increased by 11,000 to a seasonally adjusted 227,000 for the week ended March 5, still at levels consistent with a tight labour market.

Economists had forecast 217,000 applications for the latest week.

Claims have dropped from a record high of 6.149 million in early April of 2020.