U.S. inflation rate keeps heading higher, now up to 8.5%
The U.S. inflation rates are at their highest in over 40 years. Prices for food, gasoline and other necessities are rising rapidly, putting a strain on consumers and erasing the pay raises many have received.
The Labour Department said Tuesday that its consumer price index jumped 8.5 per cent in March from 12 months earlier — the biggest year-over-year increase since December 1981.
Prices have risen due to a lack of supply, strong consumer demand, and disruptions in global food and energy markets. These were all caused by Russia’s aggression against Ukraine.
Inflation increased by 1.2 per cent in the month of March alone from February’s level. That’s the biggest one month increase since 2005 and an uptick from the 0.8 per cent increase from January to February.
March’s inflation numbers were the first to reflect the full spike in gasoline prices following Russia’s invasion on February 24. Moscow’s brutal attacks on the Russian economy have triggered severe Western sanctions and disrupted global food markets and energy markets. The average price of a gallon of gasoline in the U.S. currently costs $4.10 US, a figure that has increased by 43 per cent from a year ago.
“The war in Ukraine has complicated the inflation outlook,”Luke Tilley is chief economist at Wilmington Trust.
The cost of filling up a tank has increased, as have the costs of shipping to get to a customer’s doorstep.
This eye-popping number increases the likelihood that the U.S. central banking will be even more aggressive in raising the interest rate for the remainder year to slow borrowing, spending, and to control inflation.
The four-decade-old problem of inflation in America, Canada, and the rest of the world began to worsen after the sudden, but devastating, coronavirus depression that began in 2020.
Businesses were caught off guard by the huge infusions and low interest rates that fueled the recovery. They had to respond to a growing customer demand. Factories and ports struggled to keep up with demand, leading to shipping delays and price increases.
While this is an impressive figure by any measure, economists are starting think that March may be the peak for inflation. The number will slowly fall from now on, according to some economists.
“March will likely be the peak for inflation as the indices will be lapping some strong year-ago readings starting in April, while gasoline prices have eased off lately,”Katherine Judge, economist at CIBC said.
Source: CBC
