Inflation in the U.S. has surged to a 40 year high despite officials at the White House and Federal Reserve hoping to see a tick down month by month.
Our inflation accelerated at the fastest pace in 40 years according to data from the Bureau of Labor Statistics
The consumer price index for March is estimated to have risen by 8.5% from the same time last year. Up from the 7.5% pace in February. This is the fastest increase since December 1981.
On a monthly basis, inflation was up 1.2%, the BLS said, with both tallies topping Wall Street forecasts.
“One cannot escape it, even if one wanted to,” said Joe Brusuelas, chief economist at RSM. “This is going to continue for a while.”
Bank of America analysts lowered the estimated growth for 2022 from 3.6 percent to 3.3 percent. The Federal Reserve also downgraded its GDP forecasts.
“The Federal Reserve will feel emboldened today to press ahead with its aggressive hiking of interest rates as it looks to combat inflation. While used car prices and other non-essential items have begun to reach their price peak, the headline figures today illustrate how much of this is an energy-related shock,” said Hinesh Patel, portfolio manager at Quilter Investors. “Ultimately, this will continue for some time as oil producers remain content with where the oil price currently sits and the war in Ukraine rages on, adding pressure for further sanctions on Russian gas and oil.”
The Washington Post reported: Inflation has proven to be one of the most blistering features of the pandemic recovery, one that weighs directly on households across the country. Rents are rising, groceries are more expensive, and even wage increases aren’t always enough to cover the basics. And households aren’t expecting a quick reprieve. Survey data from the New York Fed showed that in March 2022, U.S. consumers expected 6.6 percent inflation over the next 12 months, up from 6.0 percent in February. That marked the highest reading since the survey began in 2013 and a steep month-to-month jump.
The more households and businesses expect prices will climb in the future, the more self-fulfilling inflation can become. Already, policymakers are rushing to get ahold of prices that have turned out to be anything but the temporary wrinkle they predicted for much of the pandemic.
Core inflation, which does not include volatile components, rose .3% on the month, and 6.5% on the year making it the highest since February 1991.
U.S. crude futures have hit a 10-year high of $123.70 per barrel.
As the Ukraine/Russia conflict continues to wage it’s expected that prices will continue to soar as we see wheat and other food prices jump as reports of damaged crops and grain are linked to the situation at hand.
The Dow Jones Industrial Average rose 235 points in the opening hour of trading and the S&P 500, which is down 7.4% for the year, gained 44 points. The tech-focused Nasdaq gained 210 points.
As the conflict between Ukraine and Russia continues to wage on with sanctions in place, the U.S. can continue to feel the burden of these decisions put in place by the government.
Apartment rental costs rose 0.5% in January, the fastest increase in 20 years. Electricity prices surged 4.2% in January alone, the highest rise in 15 years, and are up 10.7% from 2020.
Food costs have increased by 0.9% in January.
“Just as price pressures in some areas ease, inflation in other parts of the economy” is picking up, said Sarah House, an economist at Wells Fargo. “The upshot is that inflation is likely to remain uncomfortably high.”
Many Americans are going to be less able to afford the bare necessities as inflation emerges as one of the biggest risk factors for the declining economy. This could pose a serious threat to President Joe Biden and congressional Democrats as midterm elections loom later this year.