WASHINGTON (WNI) — A sharp rise in US inflation data of 8.5% in March comes after the index jumped 7.9 percent in February, the biggest annual increase in inflation in over 40 years.
The stringent lockdowns implemented in China in response to the latest outbreak of omicron illnesses are exacerbating global supply chain issues, hurting truck and container ship travel in the world's second-largest economy - with knock-on effects for US consumers.
Following the release of inflation statistics showing that the consumer price index increased by 8.5 percent in March, the dollar index reached a nearly two-year high over 100.33. Inflation data for March also indicated that core CPI rose 6.5 percent year on year, although month-to-month CPI was lower than predicted.
Year-over-year price increases were widespread across the economy. In the last year, gasoline costs have risen by 48 percent. Used automobile prices have risen by 35%, despite falling in February and March. Bedroom furniture is up 14.7%, and men's suits and coats are up 14.5%. Grocery costs have risen by 10%, including rises of 18% for both bacon and oranges.
In 1981, consumers had to deal with significant cost-of-living increases, such as groceries rising 4.3 percent year on year, residential rent growing 8.5 percent, and energy rising 11.9 percent.
In comparison, most Americans saw their grocery expenditure increase by 10% year on year in March, while rent increased by 4.4 percent and energy increased by 32%.
According to the minutes of the Fed's March policy meeting, which were released last week, many participants remarked that one or more 50 basis point hikes in the target range could be appropriate at future meetings, especially if inflation pressures remained elevated or escalated. The central bank could now start shrinking its balance sheet as early as May, with officials indicating support for monthly caps of 95 billion US dollars.