Consumer prices rose 8.5% in March, slightly hotter than expected and the highest since 1981

The prices that people pay everyday for items rose in March, reaching their highest level since the Reagan administration’s early days. Labor Department dataReleased Tuesday.

On an unadjusted basis the consumer price index which measures a large-ranging range of goods and services, rose 8.5% to a year ago, surpassing even the Dow Jones 8.4% estimate.

The so-called core CPI rose 6.5% in 12 months, compared to the expectations. There were some signs of core inflation ebbing as the CPI rose 0.3% in the last month, which was less than the 0.5% forecast. It was possible that the March peak might be coming soon, as this suggests that inflation is easing overall.

The report was well received by the markets stocks roseThe yields on government bonds declined.

Andrew Hunter, Senior U.S. Economist at Capital Economics wrote that “the big news” in March’s report was that core prices pressures appear to have cooled. Hunter stated that he believes the March rise will be the “peak” of inflation, as year-overyear comparisons push the numbers down and the energy prices drop.

Lael brainard, Federal Reserve Governor said slowing growth in core CPI is “welcome” in an effort to lower inflation.

Brainard said to Wall Street Journal that he would be watching to see if moderation continues in the future.

These data reflect price increases that have not been seen in the U.S.A since the early 1970s, when there was stagflation. The headline reading for March was in fact the highest since December 1981. Core inflation was the highest level since August 1982.

The rise in inflation meant that worker wages didn’t keep up with rising costs of living, even though they rose 5.6% compared to a year earlier. According to another Bureau of Labor Statistics report, the real hourly earning average suffered a 0.8% decrease seasonally.

Inflation pressures could be exacerbated by inability to pay wages the same as costs.

It Atlanta Federal Reserve wage trackerFitch Ratings chief economist Brian Coulton said that March saw gains of 6%, which was “symptomatic” of rising inflation. Coulton said that while core inflation declined, it was due in large part to an increase in other prices.

Shelter costs which account for about one third of CPI weightings, rose another 0.5% per month. This makes the twelve-month increase a stunning 5%. It is the largest gain since May 1991.

The Fed was established to combat inflation. has begun raising interest ratesThis trend is likely to continue into the next year as well as 2023. Last time that prices were so high, Fed raised the benchmark rate to almost 20%. The Fed then pulled the economy into a recession which eventually defeated inflation.

While economists don’t anticipate a recession, many Wall Street analysts do. are raising the probabilityThere is a possibility of a recession.

“Overall, the report is encouraging at the margin,” stated Ian Shepherdson (chief economist, Pantheon Macroeconomics). We are certain they will drop, but it is the rate of decline that matters.

Many factors contributed to price rises.

As prices rose for food by 1.1% and 8.8% in the past year, they also increased for foods such as fresh vegetables, meat, and ground beef. The prices of energy were higher by 11%, 32% and 32%. However, the prices for gasoline rose 18.3%. This was a result of increased prices due to increased competition. the war in UkraineThe pressure that it puts on the supply.

Inflation burst in one major sector in March, but it has subsided. Prices for used cars and trucks fell by 3.8%, but they still rose 35.3% over the previous year. Commodity prices, excluding energy and food, fell 0.4%.

These decreases were offset by 0.6% monthly increases in medical care, clothing and services other than energy. Transport services saw a 2% increase, taking its twelve-month gains to 7.7%.

A sign of recovery in an area that was hard hit during the recession the Covid pandemicThe airline fares rose by 10.7% during the month, and were up 23.6% compared with a year ago.

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