Consumer price inflation hit a new 40-year high in March
Anneken Tappe, CNN Business
(CNN) — America’s inflation problem didn’t abate in March. Prices kept creeping up, hitting a fresh 40-year high, data from the Bureau of Labor Statistics showed Tuesday.
The Consumer Price Index rose 8.5% for the year ended in March, not adjusted for seasonal swings. That outpaced February’s elevated reading of 7.9% and marked a level not seen since December 1981 when the CPI stood at 8.9%. Tuesday’s March data was also slightly higher than the 8.4% economists had predicted.
Most of the March increase was driven by a jump in gasoline and food prices, which rose as the Ukraine conflict threw global commodities markets for a loop, as well as an upswing in housing costs.
Last month alone, US gas prices rose by more than 18%. Year-over-year, the price of gas soared by 48%.
Stripping out the more volatile food and energy categories, prices rose 6.5% over the 12-month period ended in March — the biggest jump since August 1982.
Energy costs soared 32% over the last year, while food prices rose by 8.8%. It was the biggest increase in food prices since May 1981.
Price pressure as far as the eye can see
Even though the more volatile items contributed so much to last month’s price hikes, Tuesday’s numbers also show that inflationary pressures are broad across the economy, said Joe Brusuelas, chief economist at RSM US.
“Yes, inflation may soon find its peak. However, that does not imply significant relief is on the way in the near term,” he said.
Washington’s policy makers are concerned about how high prices affect American households, and rightly so. In a consumer survey from the Federal Reserve Bank of New York, inflation expectations for the year ahead climbed to the highest level since the inception of the survey.
“Price shocks continue to cascade through the US economy. The risk of further oil and energy shocks given the war in Eastern Europe and the possibility that the European Union may choose to cut off natural gas and oil imports from Russia … would significantly roil global oil prices,” Brusuelas said in a note to clients.
The Fed has started to tighten monetary policy by ending the pandemic stimulus program and raising interest rates to get inflation under control. But monetary policy tools are blunt and take time to be effective, meaning that it will be a while until consumers can breathe a sigh of relief.
For the month of March, consumer prices rose 1.2% with seasonal adjustments, the biggest jump since September 2005. Excluding food and energy, prices rose 0.3% — less than in February, underlining how big a factor commodity prices are in the current inflation spike.
Airline tickets, furniture, medical care and motor vehicle insurance also increased in price.
“The good news here is that core inflation slowed on a month-on-month basis,” wrote Brian Coulton, chief economist at ratings agency Fitch, in emailed comments. Most of that decline can be attributed to falling car prices, he added.