U.S. inflation reached the highest level this March since December of 1981. The consumer price index increased to 8.5% earlier this spring when it was previously 7.9%.
One of the chief culprits of high inflation is gasoline. Gasoline is a large contributor as it accounted for more than half of the overall rise in costs. However, food was also a big player. Most Americans noticed that specifically vegetables, meats, and dairy products were increasingly more expensive.
Core prices, which exclude food and energy items, rose 6.5% annually in March as well. While on a monthly basis, they increased by 0.3%. Besides food, citizens have also noticed a surge in their rent prices.
The consumer price index reading from March could possibly be the peak of the current inflationary period. Many economists believe this as this took place after Russia’s invasion of Ukraine. The war started in late February, which created a spike in energy prices due to fears that cutting off Russian gas would negatively affect an already-tight supply.
For example, the CPI report showed that energy prices increased to 11% in March. This is the most since 2005. Gasoline, on the other hand, jumped to 18.3% which is the largest gain since 2009. Thankfully gas prices have now started to decline. This is most likely due to strict COVID lockdowns that are occurring in China.
Unfortunately, Americans are struggling with higher prices as their wages aren’t staying afloat with inflation. The inflation-adjusted average hourly earnings did drop by 2.7% in March. This is the 12th decline in a row that has occurred.
Many Americans are currently in a pinch due to high inflation, especially when their wage doesn’t reflect the price increases we are seeing across the country. Many economists are hopeful that should the war in Ukraine come to an end in the near future, we will most likely see a decrease in gasoline and food prices.