US inflation hits fresh 40-year high in March
By Michele Maatouk
Date: Tuesday 12 Apr 2022
(Sharecast News) - Us inflation hit a fresh 40-year high in March as energy prices surged due to the war in Ukraine.
According to figures released on Tuesday by the Labor Department, consumer price inflation jumped to 8.5% - its fastest annual rate of growth since 1981 - from 7.9% in February. Analysts had been expecting a figure of 8.4%.
On the month, prices were up 1.2% in March, versus a 0.8% increase in February and marking the biggest jump since 2005. The gasoline index surged 18.3%, accounting for more than half the total monthly increase. Food prices rose 1%, while shelter prices were 0.5% higher.
Stripping out volatile food and energy costs, core inflation was 6.5% on an annualised basis, up 0.1 percentage point on the month but below consensus estimates of 6.6%. On a monthly basis, core CPI was 0.3%, down from 0.5% in February and below consensus expectations of no change. It also marked the lowest level since September.
Andrew Hunter, senior US economist at Capital Economics, said: "With Fed officials continuing to sound more hawkish by the day, the March CPI data won't change their plans to up the pace of rate hikes to 50bp per meeting from next month.
"Even so, it does support our view that, having been slow to realise that the initial surge wasn't transitory, Fed officials are now being a bit too pessimistic about how quickly it will drop back."
Kathy Bostjancic, chief US financial economist at Oxford Economics, said: "The strong price pressures support our view that the Fed will raise the policy rate by 50 basis points at each of the May and June FOMC policy meetings and engineer a total of 200bps of rate tightening this year. This would raise the fed funds rate into restrictive territory by the end of the year."
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