U.S. inflation soared to a 40-year high of 8.5 percent year-on-year in March, driven by soaring energy and food prices, tight supplies and strong consumer demand.
The U.S. Labor Department said on Tuesday that the year-on-year increase in the consumer price index (CPI) in March was the highest since December 1981, up from 7.9 percent in February. Prices have been rising, and inflation has been above 6% for six straight months, well above the Fed’s average target of 2%.
The U.S. economy is recovering from the pandemic, benefiting in part from low interest rates and government stimulus measures to combat the impact of the outbreak, but high inflation is a stumbling block to rapid economic growth. Fed Governor Lael Brainard told The Wall Street Journal Jobs Summit on Tuesday that the Fed’s primary goal is to reduce inflation. The Fed is struggling to find the balance between tightening monetary policy without suppressing economic growth.
The U.S. Labor Department said the Russian invasion of Ukraine caused oil and gasoline prices to soar in March and set records in the middle of the month, with overall energy prices jumping 11% month-on-month in March. Grocery prices accelerated in March, rising 1.5% month-on-month, while the cost of eating out slowed.
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