U.S. consumer price growth surpassed 8% in March after energy and food prices spiked due to Russia’s war with Ukraine, bolstering expectations the Federal Reserve would take more aggressive action to contain the crisis. inflation rate highest in 40 years.
The consumer price index last month rose 8.5% from a year ago, a pace last seen in January 1982, the Bureau of Labor Statistics said on Tuesday.
Monthly growth registered at 1.2%, the fastest increase since September 2005 and fast compared to the 0.8% increase recorded in February.
After volatile items like food and energy were dropped, the “core” CPI rose 0.3% in March. The pace was slower than February’s monthly increase, but pushed the annual rate up to 6.5%.
The data reflects the immediate aftermath of Russia’s invasion of Ukraine, which has dimmed the global economic outlook and raised concerns about slowing growth coupled with mounting price pressures.
The Biden administration on Monday blamed the war on rising prices, while White House Press Secretary Jen Psaki said the CPI would “raise abnormally due to Putin’s rise in prices”.
Psaki noted that gasoline prices have increased by an average of more than 80 cents a gallon since the invasion, which she says will drive most of the increase.
Inflation expectations have taken a turn for the worse, with a new monthly survey released monthly by the New York branch of the Federal Reserve on Monday showing that US households are bracing for costs. continue to increase.
Next year, consumers expect inflation to hit 6.6. percent, an increase of 0.6 percentage points compared to the previous period. Expectations for the three-year outlook fell slightly but were still up at 3.7%.
Fears that inflation will become increasingly ingrained in the world’s largest economy have prompted the US central bank in recent weeks to take a more aggressive approach to tightening monetary policy.
The Fed is now poise rate hike by half a percentage point at next policy meeting in May, double rate The exchange rate in March increasedas they are looking to raise their benchmark policy rate to a more “neutral” level that will not support or limit growth at the end of the year.
Officials forecast that rate to be around 2.4%, meaning at least one half-point adjustment plus four quarter-point rate increases by 2022.
Central banks are also set to start shrink the balance sheet by $9 billion next month, up to $95 billion a month for about three months starting in May.
