Things are looking UP! In terms of prices, that is. Inflation in March was 8/5% higher than the year before.
Consumer prices rose 8.5 percent in the year through March, reaching the fastest inflation rate since 1981. Stubbornly rapid price increases have been exacerbated by a recent surge in gas costs tied to Russia’s invasion of Ukraine.
Fuel prices jumped sharply higher last month, with the U.S. average for a gallon of regular gas peaking at $4.33 on March 11.
Gas is not the entire story. Stripping out volatile fuel and food, so-called core prices climbed at a brisk 6.5 percent in the year through March, up from 6.4 percent in the year through February. Even so, the core index offered a rare glimmer of good inflation news: It slowed down a bit on a monthly basis, rising 0.3 percent from February, compared with 0.5 percent the prior month.
March’s data may represent a high-water mark for inflation, some economists have said. Overall price increases could begin abating in the coming months in part because gasoline prices have come down somewhat — a gallon cost $4.10 on Tuesday, according to AAA. Researchers have been expecting consumers to stop buying so many goods, like cars and appliances, potentially taking pressure off overburdened supply chains and allowing prices for those products to moderate.
Given the pop in gasoline prices in March, “these numbers are likely to represent something of a peak,” said Gregory Daco, the chief economist at Ernst & Young’s strategy consultancy, EY-Parthenon. Still, he said, it will be critical to watch whether the core numbers slow down on a monthly basis this spring and summer.
Not good news for the economy. And even worse news for Democrats, who reportedly seem poised to lose the House and the Senate in November.
The Consumer Price Index — a measure of inflation in the economy — hit a four-decade high in March, a brutal reminder for Democrats of the political headwinds facing them as they seek to keep their majorities in the House and Senate this fall.
Prices rose 8.5% from March 2021 to March 2022, while they increased 1.2% from February to March. Half of the increase in the CPI was due to rising gas prices in March.
The Biden administration had been expecting a bad CPI number. “We expect March CPI headline inflation to be extraordinarily due to (Russian President Vladimir) Putin’s price hike,” said White House press secretary Jen Psaki on Monday.
(It’s worth noting here that inflation had been surging prior to Russia’s invasion of Ukraine and the United States’ decision to stop importing all Russian oil.)
The problem for Biden (and his party) is that it’s not at all clear that people care why everything they are trying to buy costs more. All they know is that gas prices are through the roof — although they are lower this week than last — and everything they want or need to buy costs more (a lot more) than it did a year ago.
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Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.