US inflation reaches 40-year high as prices of petrol, food soars

The United States consumer price index rose above 8% in March, the fastest rate since 1981 following a surge in the price of gasoline and food as a result of the Russia-Ukraine conflict.

In March, the consumer price index rose 8.5% year-on-year surpassing Wall Street’s estimates, according to a report by the Bureau of Labor Statistics.

The monthly growth was the fastest since September 2005 at 1.2%, and a significant rise from the 0.8% increase in February.

Part of the report read, “The all items index continued to accelerate, rising 8.5 percent for the 12 months ending March, the largest 12-month increase since the period ending December 1981. The all items less food and energy index rose 6.5 percent, the largest 12-month change since the period ending August 1982.

“The energy index rose 32.0 percent over the last year, and the food index increased 8.8 percent, the largest 12-month increase since the period ending May 1981.“

Excluding volatile items like food and energy, “core” CPI increased by 0.3% in March. The weakest growth since September, spurring a rally in Treasuries and overnight funding markets as traders wagered that the Federal Reserve would not have to tighten policy as forcefully as previously believed to combat inflation.

Rising gas prices were the mainly responsible for the increase. The gasoline index rose 18.3% in March and accounted for over 50% of all the items’ monthly increase, The Guardian reports.

In comparison to February, the food index rose 1% in March and is up 8.8% compared to the prior 12 months. Canned fruit and vegetable prices rose 3.8% from February to March, rice prices rose 3.2%, potatoes 3.2% and ground beef 2.1%.

According to a new monthly survey released on Monday by the New York branch of the Federal Reserve, inflation expectations have climbed which shows that US families are prepared for cost increases to continue.

The US central bank has adopted a more aggressive approach to tightening monetary policy in recent weeks over concerns that inflation may become more entrenched in the economy.