Inflation hits its highest level in 40 years, driven by energy and gasoline prices; even higher inflation in the Midwest

CLEVELAND, Ohio — Inflation has once again risen to levels not seen in decades, according to data released Tuesday by the Bureau of Labor Statistics. Deeper dives into the data show that much of the record came from energy prices.

The consumer price index rose 1.2% in March and 8.5% since March 2021, according to national data. Prices in the Midwest, which includes data from Ohio and several other states, rose 8.6% year over year and 1.3% in March.

This is the highest level of inflation seen nationwide since 1981. The record was last broken a month earlier, in February, when the annual increase of 7.9% reached a 40-year high.

Energy prices are leading the way, up 32% year-on-year, although more recently there has been some relief with lower average gasoline prices both nationally and globally. ‘Ohio in early April.

Food prices rose 8.8% nationally. Excluding energy and food prices, which are typically the most volatile and changeable, prices have risen 6.5% over the past year.

According to the US Department of Labor, price increases for gasoline, housing and food were the main contributors to the increase in March compared to February. Gasoline prices alone rose 18.3% in one month. Airfares rose 10.7% in March after rising 5.2% in February.

The March 2022 data is the first to show a full picture of what Russia’s invasion of Ukraine is doing to gasoline and other prices, according to The Associated Press.

Transportation services as a whole are up 7.7% since last March, according to BLS data. Housing is up 5%. Used cars and trucks are up 35.3%, despite falling 3.8% in March. Bedroom furniture is up 14.7%, men’s suits and coats 14.5%.

Kurt Rankin, regional economist for PNC Bank, said in a report that looking at prices minus food and energy shows some of the inflation is slowing.

He said the core CPI, which excludes energy and food prices, is only slightly higher than the annual increases observed in February on these items.

“The modest acceleration in core CPI in March 2022 tells an important story in the overall inflation narrative this month,” Rankin said in his analysis. “Removing the 32% year-over-year (11% month-over-month) monthly increase in energy, the CPI sub-index reveals the slowest acceleration in month-over-month in overall prices since August 2021, which was actually a modest pullback in the pace of price inflation.

He said even food prices were rising slightly more slowly than in February, “placing the burden of inflationary pressure for the month squarely on the shoulders of the Energy component.”

In Greater Cleveland, inflation has hurt all kinds of businesses and organizations. Food banks are grappling with the double whammy of higher prices and increased need. Restaurants like barbecues are seeing their profits drop as meat prices rise.

As the Federal Reserve Bank fights inflation by raising interest rates, home buyers are seeing rising mortgage rates. Although this is not yet slowing down the housing market.

Simply put, $100 in February 2020, just before the COVID-19 pandemic, has purchasing power of $111.14 in March 2022.

Rankin writes that PNC expects the pace of inflation to fall to 4.3% year-over-year by December, while also predicting that the Federal Reserve will take more drastic measures than those announced during its March 2022 meeting. At this meeting, the Fed outlined plans to raise interest rates seven times by the end of the year.

Data for the Cleveland metro area was not available, as inflation is only tracked in certain local areas, such as New York, Los Angeles and Boston.

Source link

Edward L. Robinett