It’s not like Liza Minnelli and inflation have ever been this high if you’re 41 or younger. Consumer prices in the United States rose by 8.5% in March, the fastest rate since 1981.
From the Labor Department report, here are a few of the things we learned:
Gas prices rose by 48%, which accounted for half of the monthly increase.
People now use Fruity Pebbles as their reserve currency because the price of cereal went up by 9.2%. (Meat prices went up even more: 14.8%.)
This is just in time for the wedding season, and prices for men’s jackets, suits, and coats went up 14.5 percent for the year. Airline prices went up 10.7 percent in the last month.
But there were some signs that were good.
Used car prices, which have risen 35% in the last year, fell from February to March. Core CPI, which doesn’t include volatile food and energy prices, grew just 0.3% for the month instead of the 0.5% expected, which isn’t very good news. There are some experts who think that the core CPI figure came in lower than expected, which could mean that inflation growth came to an end in March.
If that’s the case, we’ve finally reached the top of a mountain with a lot of false summits. In the summer of 2021, the Fed thought inflation was caused by problems with the Covid supply chain. But there were still shortages. Consumer demand was still high. Russia invaded Ukraine, taking away a lot of food and energy. China shut down the city of Shanghai, which sends important parts to U.S. factories.
What will happen next?
If inflation were to go down, it would be because of a couple of things:
“The cure for high prices is high prices.”
Policy changes, such as the Fed raising interest rates, have made it more difficult for people and businesses to borrow money.
But even if those remedies work, it will likely be years before prices return to the Fed’s 2-percent target rate of growth.