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Consumers continued to spend in March even as inflation rose to its highest level since late 1981, according to government data released Thursday.

Retail sales climbed 0.5% from the previous month, slightly less than the 0.6% Dow Jones estimate and a deceleration from the upwardly revised 0.8% gain in February.

The move came with inflation rising 1.2% for the month as measured by the consumer price index.

Retail sales data is not adjusted for inflation. Consequently, the biggest gain in sales for the month game at gas stations, which saw an 8.9% increase in sales as gasoline prices rose 18.3% during the period. The sector has seen a 37% sales burst over the past year.

By contrast, online sales slumped sharply, falling 6.4% for the month. General merchandise stores saw a gain of 5.4%, sporting goods and electronics stores both had 3.3% gains, and sales at food and beverage stores along with bars and restaurants rose 1%.

Retail sales broadly rose 6.9% from a year ago, a period during which CPI inflation surged 8.5%, the highest level since December 1981.

In other economic data, initial jobless claims rose to 185,000 for the week ended April 9, an increase of 18,000 from the previous week and above the estimate of 172,000. Continued claims, which run a week behind the headline number, fell by 48,000 to 1.475 million.

Also, inflation continued to hit imports, with prices rising by 2.6%, the largest monthly increase since April 2011, the Bureau of Labor Statistics reported. That was higher even than the 2.2% estimate.

On a 12-month basis, import prices jumped 12.5%, the largest such gain since September 2011.

Correction: The consumer price index rose 1.2% in March. An earlier version misstated the percentage.

Getting inflation under control will require raising interest rates at a faster pace than normal even though the pace of price increases probably has peaked, Federal Reserve board member Christopher Waller said Wednesday.

That means the central bank likely will hike short-term rates by half a percentage point, or 50 basis points, at its meeting in May, and possibly follow it up with similar moves in the next several months, Waller told CNBC. The Fed normally increases in 25-basis-point increments. A basis point equals 0.01%.

“I think the data has come in exactly to support that step of policy action if the committee chooses to do so, and gives us the basis for doing it,” he said during a live “Closing Bell” interview with CNBC’s Sara Eisen. “I prefer a front-loading approach, so a 50-basis-point hike in May would be consistent with that, and possibly more in June and July.”

Markets already have almost fully priced that level of increase at next month’s Federal Open Market Committee meeting, as well as the following session in June, according to CME Group data that tracks moves in the fed funds futures market. Pricing for July also is tilting that way, with a 56.5% probability of another 50-basis-point hike.

That means that should the Fed choose to move aggressively, it won’t come as a surprise.

Waller said he thinks the central bank can pull off the tighter policy now because the economy is strong enough to support higher rates. The Fed is looking to raise rates to stave off inflation running at its highest levels in more than 40 years.

“I think we’re going to deal with inflation. We’ve laid out our plans,” he said. “We’re in a position where the economy’s strong, so this is a good time to do aggressive actions because the economy can take it.”

Nevertheless, there is some disagreement over how aggressive FOMC members want to be in the inflation battle.

In March, those favoring a quarter-percentage-point hike held just a tiny majority over those who wanted to double that. Officials through their public statements have offered differing views about how far the Fed should go, with Waller part of a group that wants rates to go past “neutral,” or the point where they are considered neither restrictive nor stimulative. The neutral funds rate now is considered to be around 2.5%.

On the other side of the debate, policymakers including Fed board member Lael Brainard and Chicago Fed President Charles Evans have said in recent days that they would rather get the rate to neutral and then assess what future actions may be needed.

“I think we want to get above neutral certainly by the latter half of the year, and we need to get closer to neutral as soon as possible,” Waller said.

St. Louis Fed President James Bullard told the Financial Times that it’s “fantasy” to think rates can go to neutral and still bring down inflation.

For his part, Waller said he is confident inflation will start coming down, even though the Fed’s powers are limited to control the lagging supply chains associated with the current round of higher prices.

“All we can do is kind of push down demand for these products and take some pressure off the prices that people have to pay for these products,” Waller said. “We can’t produce more wheat, we can’t produce more semiconductors, but we can affect the demand for these products in a way that puts downward pressure and takes some pressure off of inflation.”

Earlier in the day, Treasury Secretary Janet Yellen, a former Fed chair, said of the agency’s board members, “It’s their job to bring inflation down.”

“They have a dual mandate. They will try to maintain strong labor markets while bringing inflation down,” Yellen said during an appearance before the Atlantic Council. “And it has been done in the past. It’s not an impossible combination, but it will require skill and also good luck.”

The prices that goods and services producers receive rose in March at the fastest pace since records have been kept, the Bureau of Labor Statistics reported Wednesday.

The producer price index, which measures the prices paid by wholesalers, increased 11.2% from a year ago, the most in a data series going back to November 2010. On a monthly basis, the gauge climbed 1.4%, above the 1.1% Dow Jones estimate and also a record.

Stripping out food, energy and trade services, so-called core PPI rose 0.9% on a monthly basis, nearly double the 0.5% estimate and the biggest monthly gain since January 2021. Core PPI increased 7% on a year-over-year basis.

PPI is considered a forward-looking inflation measure as it tracks prices in the pipeline for goods and services that eventually reach consumers.

Wednesday’s release comes the day after the BLS reported that the consumer price index for March surged 8.5% over the past year, above expectations and the highest reading since December 1981.

On the producer side, prices for final demand goods led with a 2.3% monthly rise, while services prices gained 0.9%, up sharply from the 0.3% February increase. Goods inflation has outstripped services during the Covid pandemic, but March’s numbers indicate that services are now catching up as consumer demand shifts.

Energy prices were the biggest gainer for the month, rising 5.7%, while food costs increased 2.4%.

Swelling inflation has prompted the Federal Reserve to begin tightening monetary policy.

In March, the Fed increased its benchmark short-term borrowing rate by 0.25 percentage point as the first step in what is expected to be a series of hikes through the year. Markets are pricing in an almost certainty that the central bank will double that move at its May meeting, and will keep going until the fed funds rate hits about 2.5% by the end of the year.

Markets initially showed no reaction to the PPI news, with stock market futures hovering around flat and Treasury yields also little changed.