By Alice Seeley
On April 12, The Bureau of Labor Statistics announced that U.S. inflation reached a new four-decade high of 8.5% in March. This is the sixth month in a row that inflation is above 6%.
Inflation increased by 1.2% increase from the 7.9% reported in February. This is the biggest gain in one month since 2005.
The record-high jump in inflation was driven by the increased prices of energy costs, food costs, supply constraints, and strong consumer demand. These increases have been caused by supply chain problems, consumer demand, and disruptions to global food and energy markets affected by Russia’s war against Ukraine.
Gasoline costs alone drove half of the monthly increase. According to AAA, the average price of a gallon of gasoline is up 43% from a year ago. The good news is that gas prices have finally started to fall, which economists believe indicates that inflation has peaked.
Food prices were also a major factor in inflation last month. In March, the average American paid more for vegetables, meats, and dairy products than ever before. Food prices rose by 1% in March compared to February and are up 8.8% compared to a year ago. Canned fruit and vegetable prices increased by 3.8%, rice and potatoes prices rose 3.2%, and ground beef 2.1%.
Excluding food and energy costs, other essential prices increased 0.3% from a month earlier and are up 6.5% from a year ago. The 0.3% increase is the slowest rise since September 2021. This slow increase has some traders hopeful that the Federal Reserve will not have to dramatically tighten policy to curb inflation as had been anticipated.
In addition to the problems caused by the Russian invasion, critics also blame the Biden administration. These critics believe that the $1.9 trillion March 2021 stimulus program caused more problems than it solved.
