How bad will inflation in the U.S. get? On Monday, a day before the Department of Labor released its inflation figures for March, White House Press Secretary Jen Psaki predicted that March’s figures would be “extraordinarily elevated due to Putin’s price hike.”
“We expect a large difference between core and headline inflation, reflecting the global disruptions in energy and food markets,” Psaki said.
The next day, the Consumer Price Index – which measures the prices of a basket of goods purchased regularly by most working American families – revealed yet another inflation increase.
Inflation Reached 8.5% in March, Reaching Forty-Year High
New data from the Department of Labor released on Tuesday showed that the cost of goods and services increased by 8.5% in March, compared to March of 2021. In February, inflation reached 7.9%, setting a forty-year record. March’s figures break that record again.
The “core” Consumer Price Index, which excludes the price of energy and food, rose by 6.5% over the last 12 months – in line with top economists’ predictions. While remarkably high, there are some signs that inflation may finally be slowing down, with the figure rising 0.3% for the month, less than the 0.5% estimate.
Lael Brainard, the governor of the Federal Reserve, said that the figures are a “welcome” development as the federal government works to bring down prices.
“I’ll be looking to see whether we continue to see moderation in the months ahead,” Brainard told the Wall Street Journal.
The dataset from March is the first to show the impact of the Russian invasion of Ukraine and the sanctions levied against Russia by the United States and NATO allies. With a fuel crisis hitting the United States and some European countries committed to sanctioning Russian energy, and major disruption to supply chains just as businesses were beginning to get into their stride after the COVID-19 pandemic, rising prices could persist for months more.
Energy prices in March rose by 11% over the last month, and by 32% compared to last year. The cost of gasoline at the pump is 48% more than it was at the same time last year, and food prices have increased 8.8% over the last year.
Used cars and trucks are also up 35.3% over the last year, and the cost of shelter increases 5% year over year.
Biden Administration Predicted Inflation Reached a “Peak” Over Three Months Ago
In December 2021, President Joe Biden told reporters that he believed inflation reaching 6.8% was the “peak of the crisis” and that the country would “see it change sooner, quicker, more rapidly than people think.”
Not only have the president’s comments proven to be incorrect, but members of his own administration and officials from the Federal Reserve disagreed with him at the time. Jerome Powell, the chairman of the Federal Reserve Board, told Congress just days before Biden made the claim that factors pushing inflation upwards were likely to “linger well into” 2022.
“The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation. Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” Powell told the Senate Committee on Banking, Housing and Urban Affairs.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.