Following a spike in gasoline and food costs, triggered by Russia’s conflict with Ukraine, the United States consumer price hike topped 8% in March, the fastest rate since 1981.
The consumer price index increased 8.5% year-on-year last month, slightly exceeding Wall Street’s estimates, according to a report by the Bureau of Labor Statistics.
The monthly growth was 1.2%, the fastest since September 2005 and a significant acceleration from the 0.8% increase in February.
The report partly reads, “The all items index continued to accelerate, rising 8.5 percent for the 12 months ending March, the largest 12-month increase since the period ending December 1981. The all items less food and energy index rose 6.5 percent, the largest 12-month change since the period ending August 1982.
“The energy index rose 32.0 percent over the last year, and the food index increased 8.8 percent, the largest 12-month increase since the period ending May 1981.“
After volatile items such as food and energy are removed, “core” CPI increased by 0.3% in March. That was the weakest growth since September, spurring a rally in Treasuries and overnight funding markets as traders wagered that the Federal Reserve would not have to tighten policy as forcefully as previously believed to combat inflation.
Soaring gas prices were the main driver of the rise. The gasoline index rose 18.3% in March and accounted for over half of all the items’ monthly increase, according The Guardian.
The food index rose 1% in March compared to February, and is up 8.8% compared to the prior 12 months. Canned fruit and vegetable prices rose 3.8% from February to March, rice prices rose 3.2%, potatoes 3.2% and ground beef 2.1%.
The numbers reflect the immediate aftermath of Russia’s invasion of Ukraine, which has significantly clouded the global economic outlook and raised concerns about slowed growth and even higher pricing pressures.
In turn, inflation expectations have climbed, according to a new monthly survey released on Monday by the Federal Reserve’s New York branch, which shows that US families are prepared for cost increases to continue.
Concerns that inflation would become even more entrenched in the world’s largest economy have driven the US central bank to adopt a more aggressive approach to tightening monetary policy in recent weeks.
