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According to the latest report released Tuesday, the Consumer Price Index (CPI) of the Bureau of Labor Statistics (BLS) rose 8.5 percent in March compared to the same month last year. Consumer price increases in the United States accelerated in March, highlighting persistent inflationary pressures as supply chain disruptions and shortages persisted across the economy.
This was the fastest increase since December 1981. This followed a 7.9 percent increase year on year in February. According to economists there was and expectation of an 8.4 percent increase in March prior to the release of the report.
Prices increased 1.2 percent month over month in March, following a 0.8 percent monthly increase in February.
According to the BLS, food, shelter, and gasoline were among the major contributors to the most recent increase in inflation.
In fact, the index that tracks gas prices rose 18.3 percent month on month in March, accounting for more than half of the total monthly increase in CPI. Gasoline prices increased by 6.6 percent in February.
Even when volatile food and energy prices are excluded, the CPI rose significantly in March. The core CPI increased 6.5 percent over last year in March, following a 6.4 percent increase in February and representing the fastest increase since August 1982.
However, a number of other major categories also contributed to the March CPI increase. In March, housing prices rose 0.5 percent month on month and 5.0 percent year on year, the largest annual increase since May 1991.
Airline fares increased 10.7 percent month over month and nearly 24 percent year over year, as rising fuel costs and increased demand for travel pushed ticket prices even higher.
For the seventh month in a row, headline consumer price increases have accelerated on an annual basis. Imbalances between supply and demand have persisted, particularly in labour (where job openings continue to outnumber new hires) and commodities in the midst of Russia’s ongoing war in Ukraine. Many of these costs have been continuously passed on to the consumer.
With no definitive signs of a peak in inflation yet to be seen, Federal Reserve members have stepped up their rhetoric about using monetary policy tools to cool rapidly rising prices.
Last week, Fed Governor Lael Brainard stated that lowering inflation was “our most important task,” while San Francisco Fed President Mary Daly stated that high inflation was “as dangerous as not having a job.”
Meanwhile, according to the minutes of the Federal Reserve’s March meeting, “many would have preferred a 50 basis point increase” in benchmark interest rates, with the larger-than-typical rate hike serving as an aggressive move toward raising borrowing costs and lowering demand.
The Federal Reserve will hold a policy-setting meeting on May 3 and 4.