Inflation Nation: Consumer Prices Jump By Most in Nearly A Decade

Consumer prices jumped again in the month of March, with the Consumer Price Index showing a 2.6% annualized gain, a significant uptick from February’s 1.7% annualized jump.

On a monthly basis, March’s prices crept higher by 0.6% on the heels of the February 0.4% increase for the fourth straight month of increasing prices.

The U.S. Bureau of Labor Statistics reports that March’s numbers show the biggest monthly gain in the prices consumers pay for goods since August of 2012. 

Gas Prices Soar 9.1%

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Energy prices soared again in March, with gasoline prices rising 9.1%. Energy prices overall are up 5%, according to the Bureau, while the food index also rose by 0.1% in the month. Food prices, over the last twelve months have gained 3.5%, while the energy index shows a 13.2% increase in prices.

Core CPI

The index for all items – excluding food and energy – showed that inflation is higher by 1.6% in the last 12 months, after increasing 1.3% last month.

Bottomline:

The U.S. is entering a period of inflation.

These numbers come on the heels of February’s consumer price gains. The question for investors is, at what point does the Federal Reserve decide to pull back on its accommodative policy?

For now, the answer seems to be not until 2024. The Fed has promised investors that the inflation numbers are merely temporary and should not be a cause for concern.

But, as former Treasury Secretary Larry Summers has pointed out,

  • The Fed MIGHT grow nervous and overreact…which would be a problem and likely put us back in recession.

  • The Fed could also choose to ignore inflation for the time being (which it seems to be doing) and therefore just postpone any kind of reckoning in the markets…

  • Or, the Fed may get this all ‘just right’ and be able to pull back at the appropriate time.

But, without a doubt, inflation is here. Invest accordingly.

 

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