The latest consumer price index report shows an annual inflation rate of 4.7 percent around Puget Sound. That's higher than the national inflation rate, which was 4.0 percent in February.

The big driver, of course, is gas prices. Take away gas prices, and Puget Sound's consumer prices were up a more-modest 3.8 percent. We spent an average of 26.9 percent more on gas last month than we did in February '07. Overall, we spent 7.4 percent more for transportation, compared to the year before - and that February figure actually was down 0.7 percent from December, suggesting that drivers cut back on trips over the winter.

If you can, take solace in the fact that the gas price increase here wasn't as bad as the national average of 32.7 percent. We still pay more at the pump than most of the rest of the country - Washington drivers were paying an average of $3.416 a gallon last week, while the national average was $3.261 - it's just that the gap has narrowed a bit.

While gas gets the headline, the cost of shelter is also climbing higher, particularly for renters, who've seen lease rates jump 8.4 percent since last year. This stands to reason - tighter mortgage standards mean fewer people are able to qualify for home loans. That, in turn, increases demand for rental housing. The Bureau of Labor Statistics also reports that "owners' equivalent of rent" was up 6.4 percent over the year. This may seem counterintuitive, given that housing prices are falling, but the short answer is that the statistic measures the cost of home ownership, not the value of the home as an asset. (If you want the full explanation, it's online here.)

Elsewhere on the home front, those of us with electric heat spent 7.1 percent more in February, which could have been due to last month's cold snap. And spending on nondurable goods - things like office supplies, cleaning products and toiletries - jumped 7.3 percent. Take out food, which is typically lumped into this sector, and nondurables were up 10 percent.

We did get a little good news - grocery costs slid down 1.1 percent between January and February. They're still up 3.3 percent year-over-year, however. And those of you with gas heat should be happy - you spent 11.9 percent less on natural gas in February.

But we didn't get much of a break at our favorite restaurants. The cost of dining out is up 5.3 percent year-over-year, and 2.2 percent since December. 

Rising inflation is likely one reason why nationwide consumer confidence is so low. We haven't seen a combination of rising consumer prices and a stagnating national economy since the bad old days of stagflation. Whether we'll see a return of '70s-style creeping unemployment and soaring interest rates is a question being debated by lots of people smarter than me, but it seems altogether reasonable to at least lay contingency plans for stagflation as a worst-case scenario.