Inflation Surge Higher Continues in March US CPI +8.5% y/y largest Increase in Forty Years

US CPI in March rose 1.2% m/m (consensus 1.2%). Core CPI rose 0.5% (consensus +0.5%). The bond market sold off ahead, 10-year yields rising seven consecutive days prior to the release. On a year-over-year basis, total CPI is up 8.5% (versus 7.9% in February) and core CPI is up 6.5% (versus 6.4% February). The surge in energy and grains costs due to war in Ukraine has inflamed price pressures. The Fed began moving aggressively last month.

Inflation

March marked the eighth time in the past 12 months that the core CPI rose at least 0.5% over the month before. 

Increases in the cost of food, electricity and shelter were the largest contributors again to the monthly rise, the Labor Department said, Energy prices increased 32%, namely gasoline (48%) and fuel oil (70.1%) in the wake of Russia’s invasion of Ukraine. Food prices jumped 8.8%, the most since May 1981.

Inflation also accelerated for shelter (5% vs 4.7% in February) and new vehicles (12.5% vs 12.4%) but eased for used cars and trucks (35.3% vs 41.2%).

Many analysts expect March to mark the inflation peak although the war in Ukraine is far from over, supply chain bottlenecks persist, and consumer demand remains elevated which is likely to weigh on the CPI

US March 2022 Highlights

US Mar: 8.5% (est 8.4%)

  • Highest since Feb 1982
  • Prior was 7.9%
  • m/m CPI 1.2% (est 1.2%)
  • Prior m/m reading was +0.8%
  • US Real Average Hourly Earnings (Y/Y) Mar: -2.7% (prev -2.6%; prevR -2.5%)
  • US Real Average Weekly Earnings (Y/Y) Mar: -3.6% (prev -2.3%; prevR -2.2%)

Core inflation:

  • Ex food and energy +6.5% vs +6.6% y/y expected
  • Most since August of 1982.
  • Prior ex food and energy +6.4%
  • Core m/m 0.3% (est 0.5%)
  • Prior core m/m +0.5%
  • Energy remained the biggest contributor, Energy prices increased 32%, namely gasoline (48%) and fuel oil (70.1%).
  • Food prices jumped 8.8%, the most since May 1981.
  • Shelter (5% vs 4.7% in February)
  • New vehicles (12.5% vs 12.4%) but eased for used cars and trucks (35.3% vs 41.2%).
  • Excluding volatile energy and food categories, the CPI rose 6.5%, the most in 40 years but slightly below forecasts of 6.6%.
US CPI Inflation – where it is

US CPI March 2022


United States Consumer Price Index (CPI)

 

United States Inflation Rate

Core Inflation y/y

United States Core Inflation Rate

Food

United States Food Inflation

Housing

United States CPI Housing

Transportation

United States CPI Transportation

US Core CPI November 2021

United States Core Consumer Prices

 

The effects of the coronavirus pandemic have been weighing on prices since in last year many businesses closed and lockdowns were imposed, denting economic activity.  A jump in commodities and material costs, coupled with supply constraints, are pushing producer prices up and some companies are passing those costs to clients

 

“I’m making more money…But I don’t see it because I’m paying more money for stuff now.” Low-wage workers are getting sharp raises. Inflation is eating them up. via Greg Ip WSJ

 Source: BLS

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