Inflation soared over the past year at its fastest pace in over 40 years, with costs for food, gas, housing and other necessities squeezing consumers.
Even before Russia's war further spurred price increases, robust consumer spending, steady pay raises and chronic supply shortages had sent U.S. consumer inflation to its highest level in four decades. In addition, housing costs, which make up about a third of the consumer price index, have escalated, a trend that seems unlikely to reverse anytime soon.
The expected fast pace of the Fed's rate increases will make loans sharply more expensive for consumers and businesses. Mortgage rates, in particular, though not directly influenced by the Fed, have rocketed higher in recent weeks, making home buying more expensive. Many economists say they worry that the Fed has waited too long to begin raising rates and might end up acting so aggressively as to trigger a recession.
Economists generally express doubt that even the sharp rate hikes that are expected from the Fed will manage to reduce inflation anywhere near the central bank's 2% annual target by the end of this year. Tilley, Wilmington Trust economist, said he expects year-over-year consumer inflation to still be 4.5% by the end of 2020. Before Russia's invasion of Ukraine, he had forecast a much lower 3% rate.
The recovery, fueled by huge infusions of government spending and super-low interest rates, caught businesses by surprise, forcing them to scramble to meet surging customer demand. Factories, ports and freight yards struggled to keep up, leading to chronic shipping delays and price spikes.
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Sticker shock: Inflation in United States likely set new 40-year high in MarchWith ever-rising costs for food, gasoline, housing and other necessities squeezing consumers and threatening the economy, inflation in the United States likely set yet another four-decade high in March.
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Sticker shock: Inflation in United States likely set new 40-year high in MarchWith ever-rising costs for food, gasoline, housing and other necessities squeezing consumers and threatening the economy, inflation in the United States likely set yet another four-decade high in March.
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Sticker Shock: March Inflation Expected to Set Another 40-Year HighWith ever-rising costs for food, gasoline, housing and other necessities squeezing consumers and threatening the economy, inflation in the United States likely set yet another four-decade high in March
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Inflation hits another 40-year high in the United StatesHave you felt the impact of inflation lately? You're not alone. The United States hit yet another 40-year high according to a report from the Bureau of Labor Statistics.
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U.S. inflation increased 8.5% in the past year, highest in 40+ yearsPrices have been driven up by bottlenecked supply chains, robust consumer demand and disruptions to global food and energy markets worsened by Russia’s war against Ukraine.
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Inflation hits its highest mark in over 40 yearsOn Tuesday, a government report showed that consumer prices jumped 8.5% in March.
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