The Consumer Price Index rose 8.5 percent in March from a year earlier, according to the Labor Department, the largest year-over-year increase since December 1981. Prices have risen due to bottlenecked supply chains, strong consumer demand, and global food and energy market disruptions exacerbated by Russia’s war in Ukraine.
Over the last year, inflation has accelerated at its quickest rate in more than 40 years, putting pressure on American consumers and wiping out salary rises for many.
Inflation jumped 1.2% from February to March, up from 0.8% from January to February, according to the government’s report.
The March inflation figures were the first to show the full impact of Russia’s Feb. 24 invasion of Ukraine on fuel prices. The savage attacks in Moscow have prompted far-reaching Western sanctions against Russia’s economy, causing global food and energy markets to be disrupted.
According to AAA, the average price of a gallon of gasoline is $4.10, up 43 percent from a year ago, though it has just dipped back.
The rise in energy prices has resulted in greater transportation costs for the distribution of goods and components across the economy, which has resulted in higher consumer prices.
The recent findings of rising prices will strengthen expectations that the Federal Reserve will raise interest rates sharply in the coming months in an attempt to curb borrowing and spending while also taming inflation. Financial markets now expect considerably higher rate hikes this year than Fed officials predicted just a month ago.
Even before Russia’s war, healthy consumer spending, steady pay gains, and chronic supply shortages had pushed consumer inflation in the United States to its highest level in four decades.
Furthermore, housing expenses, which account for nearly a third of the consumer price index, have risen, a trend that does not appear to be changing anytime soon.
Consumer spending has steadily expanded beyond products to include more services as the economy has emerged from the depths of the pandemic, according to economists.