Wall Street’s long-touted fears of inflation seem to have come to fruition. The new Consumer Report Index report for March showed U.S. inflation rose to 2.6%, higher than expected and to the highest levels since August 2018.
The Consumer Price Index, which measures what consumers pay for everyday items, increased 0.6% in March with an overall 2.6% increase over the past 12 months, according to the Bureau of Labor Statistics.
Increases in the price of gasoline largely drove the figure, accounting for nearly 50% of the seasonally adjusted increase in all the items in the index. Natural gas also contributed to a 5% increase in the energy index over the past month. Prices for food also rose slightly.
Several factors contributed to increased prices. Supply-chain barriers as a result of the coronavirus pandemic and increased consumer demand as the economy rebounds have created a tight space for prices.
This has left manufacturers dealing with acute shortages of raw materials, surging commodities prices and transportation difficulties, Reuters adds
Still, Federal Reserve Chair Jerome Powell and economists view higher inflation as temporary, with supply chains expected to adapt and become more efficient as the economy recovers, Reuters reports.
In an interview with “60 Minutes” that aired on CBS on Sunday, Powell stated, “I think it’s highly unlikely that we would raise rates anything like this year … I’m in a position to guarantee that the Fed will do everything we can to support the economy for as long as it takes to complete the recovery.”
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