Stock Groups

U.S. consumer prices accelerate in March -Breaking

[ad_1]

2/2
© Reuters. FILE PHOTO – A gasoline pump is installed inside an Audi at a Mobil station on Beverly Boulevard, West Hollywood, California. March 10, 2022. REUTERS/Bing Guan/File photo

2/2

WASHINGTON (Reuters] – The U.S. consumer prices rose by more than 50% in March, as Russia’s war with Ukraine pushed gasoline prices to new highs. These increases are a strong argument for a Federal Reserve interest rate increase of 50 basis points next month.

Labor Department reported Tuesday that the Consumer Price Index climbed 1.2% in February, its largest gain since September 2005. CPI rose 0.8% in February.

According to AAA, gasoline prices reached an all-time high at $4.33 per gallon for March. Inflation was driven primarily by gasoline, but food and other services like rental housing made significant contributions last month.

Russia is the second largest foreign exporter in the world. In a series of sanctions against Moscow, the United States have banned Russian oil, liquefied, and coal imports.

The Russia-Ukraine conflict, which is now in its second month has pushed up gas prices. It also caused a worldwide rise in food prices. Russia and Ukraine are both major exporters commodities such as wheat and sunflower oil.

CPI rose 8.5% over the 12-month period ending March. The 8.5% increase in CPI year over year was the most since December 1981. This follows a jump of 7.9% in February. The sixth consecutive month that CPI readings exceeded 6% was this one.

Reuters polled economists to forecast that consumer prices would rise 1.2% in March, and climb 8.4% year-on–year.

After data from March that revealed the unemployment rate fell to 3.6%, this strong inflation read was a follow-up.

March saw the U.S. central banks raise its policy interest rates by 25 basis point, their first rate hike in three years. The minutes of last Wednesday’s policy meeting appeared to indicate that there will be big rate hikes down the line.

The bond market is worried about high inflation and Fed’s hawkish attitude, but most economists believe the U.S. will see continued expansion.

While many think March may mark the peak of the annual CPI rate in March, it is important to remember that inflation will remain above the Fed’s 2 percent target through at least 2023.

While gasoil prices have fallen from records highs but remain at $4/gallon, CPI will start to drop from last year’s inflation readings.

The monthly reading of underlying inflation was moderated by the moderation of truck and car prices.

The CPI increased 0.3% in March, excluding volatile food and energy. It had gained 0.5% in February. After rising 6.4% in February, the core CPI saw 6.5% growth in March. This is the biggest increase since August 1982.

China’s lockdown to stop a rise in COVID-19 infection is seen as putting greater strain on the global supply chain, which may lead to higher goods prices. Inflation will be hotter due to rising rents in housing.

[ad_2]