US inflation at 16.5-year high

US monthly consumer prices increased by the most in 16.5 years in March as Russia’s war against Ukraine boosted the cost of gasoline to record highs, cementing the case for a 50-basis-point interest rate hike from the Federal Reserve next month. The surge in prices reported by the Labour Department on Tuesday culminated in annual inflation rising at its fastest pace since the end of 1981. But there were some glimmers of hope, with monthly underlying price pressures rising moderately as motor vehicle prices cooled. Economists also believe overall inflation has peaked. “The Fed will take a tiny bit of comfort from today’s (Tuesday’s) report, but it still has much work to do to restore price stability,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. The consumer price index accelerated 1.2% last month, the biggest monthly gain since September 2005.

Published in The Express Tribune, April 13^th, 2022.

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