Consumer prices in the United States increased by the highest since late 1981 in March, bolstering predictions that the Federal Reserve will raise interest rates by a half-point next month.
Data from the Ministry of Labor revealed an increase in the consumer price index of 8.5 percent from a year ago today, Tuesday, after increasing by 7.9 percent on an annual basis in February, according to the "Bloomberg East" website. The highly watched inflation gauge increased by 1.2 percent from the previous month, the highest increase since 2005. The cost of gasoline accounted for half of the monthly rise.
According to a Bloomberg poll, economists predicted the overall CPI to rise 8.4% from a year ago and 1.2 percent from February.
The March CPI number reflects the pinnacle of the current inflation era, according to many experts, reflecting the impact of increasing food and energy prices following Russia's invasion of Ukraine. With the Fed adopting a more hawkish stance, inflation is unlikely to return to the central bank's target of 2% anytime soon, especially given China's war and coronavirus-related lockdowns, as well as rising demand for services such as tourism.
At the same time, the chances of the economy entering a recession are increasing. A growing number of economists are forecasting a downturn in activity; Either consumer spending falls in response to higher prices, or the Fed will over-correct its catch-up efforts. However, the majority of people still believe the economy will improve.