But just how much depends on what data you’re referencing. The personal consumption expenditures (PCE) price index—which is the preferred inflation barometer for the Federal Reserve—released Tuesday confirms that prices are growing at the fastest rate in four decades. 

The cost of goods and services bought by Americans shows prices were up 6.4% annually in February, according to the Bureau of Economic Analysis. Core inflation, which excludes the more volatile food and energy costs, is up 5.4% year-over-year—the fastest rate of growth since 1983. 

“Inflation took a bite out of household incomes and spending in February and will be an even bigger drag in March with surging energy prices in the wake of the Russian invasion of Ukraine,” says PNC chief economist Gus Faucher.

While the PCE jump reflects rising costs in both the goods and services sectors, energy and food prices shifted significantly, 25.7% increase and 8% bump, respectively. Yet the inflation story is about more than just energy, Faucher says. Supply-chain disruptions as well as higher labor and operating costs are also still playing a role, he added.

Now if you thought that inflation rose 7.9% in February, you’re not wrong. The Bureau of Labor Statistics’ Consumer Price Index (CPI) recorded that increase in a report published at the beginning of the month. But there are two major gauges of U.S. inflation: the CPI and the PCE price index. 

The Federal Reserve has preferred relying on the PCE since 2012 because it takes into account goods and services bought by all U.S. households and nonprofits. The CPI only calculates prices from the spending of Americans living in urban ares (as opposed to those living outside of major cities). The PCE also includes broader and more comprehensive range of purchases in its calculations, such as employer-sponsored health insurance costs, as well as Medicare and Medicaid spending.

The formula used to calculate the PCE also responds “more fluidly” when consumer preferences shift and can be revised more thoroughly to reflect new data when it becomes available. 

But the bottom line is that both overall PCE and core inflation are running far above the Fed’s 2% goal post and are expected to continue to soar with the Ukrainian war affecting energy and commodity prices. 

That could lead to bigger rate hikes—and faster. Earlier this month, the Fed moved to increase interest rates by a quarter percentage point in an effort to slow inflation by dampening consumer demand and economic growth. Fed Chair Jerome Powell signaled last week he may be open to a .5% rate hike.

PNC expects the Fed to raise rates by an additional cumulative 1.75 percentage points through the rest of this year, to a range of 2.00% to 2.25% by the end of 2022, with additional rate hikes likely in 2023, according to Faucher. That will likely impact mortgage rates, credit card APRs, and even savings account interest.

But despite the effects of the pandemic and Russia’s war with Ukraine, Faucher says PCE inflation should slow to around 4% by the end of 2022. He expects inflation to return to the Fed’s 2% objective by the end of 2023.