Consumer prices climbed further into the stratosphere in March, and the only consolation is that the painful bout of skyrocketing costs may have peaked.
Inflation hit a fresh 40-year high as continuing surges in gasoline, food and rent costs more than offset moderating prices for used cars.
The consumer price index leaped 8.5% annually, the fastest pace since December 1981, the Labor Department said Tuesday, likely cementing Federal Reserve plans for an unusually large half-point interest rate hike early next month. That increase is up from 7.9% in February, and inflation now has notched new 40-year highs for five straight months.
Prices rose 1.2% from their February level, the sharpest monthly increase since September 2005.
Gasoline prices were the chief inflation culprit, jumping 18.3% and accounting for more than half the overall rise in costs. Average unleaded gas set a record $4.33 a gallon last month before easing to $4.11 by Monday, according to AAA. Pump prices are up 48% from a year earlier. Russia’s invasion of Ukraine stoked last fall’s inflation surge by reducing Russian oil supplies and intensifying supply chain bottlenecks, especially for energy, wheat and other commodities shipped from the region.
Meanwhile, worker shortages in the U.S. are prompting companies to boost pay sharply to attract job candidates, leading them to lift prices to maintain profit margins.
Excluding volatile food and energy items, so-called core prices rose 6.5% annually in March, the largest advance since August 1982.