Over the past 12 months, the Consumer Price Index (CPI) hit 8.5% after it increased 1.2% in March:
Increases in the indexes for gasoline, shelter, and food were the largest contributors to the seasonally adjusted all items increase. The gasoline index rose 18.3 percent in March and accounted for over half of the all items monthly increase; other energy component indexes also increased. The food index rose 1.0 percent and the food at home index rose 1.5 percent.The index for all items less food and energy rose 0.3 percent in March following a 0.5-percent increase the prior month. The shelter index was by far the biggest factor in the increase, with a broad set of other indexes also contributing, including those for airline fares, household furnishings and operations, medical care, and motor vehicle insurance. In contrast, the index for used cars and trucks fell 3.8 percent over the month.The all items index continued to accelerate, rising 8.5 percent for the 12 months ending March, the largest 12-month increase since the period ending December 1981. The all items less food and energy index rose 6.5 percent, the largest 12-month change since the period ending August 1982. The energy index rose 32.0 percent over the last year, and the food index increased 8.8 percent, the largest 12-month increase since the period ending May 1981.
March is also the sixth straight month we’ve had inflation over 6%.
The calculations remain high if you take out energy and food, which ate considered volatile. That makes up the core price index and it rose 6.5% in March from last year, up from 6.4% in February. That’s also “the sharpest 12-month rise since August 1982.”
Inflation began in early 2021. This all happened before Russia’s full-scale invasion of Ukraine. It made everything worse.
But this is not Putin’s Price hike. The surge began in early 2021 when Biden came into office.
Has inflation peaked? Hopefully, it is close:
One possible early sign came from the monthly change in the core index. It rose 0.3% in March from the prior month, the slowest pace in six months, driven by a 3.8% decline in used vehicle prices.Another encouraging sign was that airline fares, hotel prices and other more volatile categories drove much of the price gains for services, while pressure from categories such as housing, which tend to be more persistent, eased, said Blerina Uruci, U.S. economist at T. Rowe Price Group Inc.However, Ms. Uruci added that said supply-chain constraints continue to push prices up, except for an easing of the costs for used cars.“The other red flag is Russia’s invasion of Ukraine and the rise of Covid in China,” she said. “Those pose risks that the so-called normalization of supply chains takes longer to materialize.”
I invite you to read Fuzzy’s post on Victory Gardens. It’s time to get planting again. Normally I wouldn’t ever say to cut down on meat, but ground beef is almost $5 a pound, which is almost 15% higher than last March. That sucks.
Buy flour and grains now. The war in Ukraine will cause grain prices to rise higher in price “because of disruption to global wheat and fertilizer production.”
This mess is causing serious problems for families, especially ones with a lot of children. WSJ spoke to Alex Salwisz, who has five children.
It would be easy to tell Salwisz to tell his children to suck it up but children, especially younger ones, are creatures of habit. Humans in general are creatures of habit:
He said he has tried to substitute generic food products for name-brand foods as prices shot up—not always successfully. His children—ages 3 to 12—pushed back recently when he sneaked a bag of off-brand marshmallow cereal into a Lucky Charms box. “It didn’t pass,” said Mr. Salwisz, a program manager in information technology who lives in the Denver suburbs. “They had a little revolt, and more than one of them told me I shouldn’t do that again.”Inflation has eroded their living standard in other ways, Mr. Salwisz said. The children have grumbled when the family crams uncomfortably into the smaller of two vans to save on gas. They have substituted a fast-food meal for the once-a-month sit-down dining experience. He and his wife, Amber Salwisz, are considering scrapping plans for summer camp because of a sharp increase in prices. One partial-day camp increased its price to $800 a week this summer from $500 the prior.
It doesn’t help that the government and states kept their citizens locked up for so long because people are desperate to get out, causing demand in the travel, restaurant, and hospitality sectors.
Higher demand means higher prices. We’re driving to Boston this summer mainly to check out war battlefields, but also because flying is expensive. We’ll stay at cheap hotels on the way up there. We booked an Air BnB so we would have a place to cook to cut down on eating out.
Plus restaurant owners need to make back all the money lost when governments forced them to close.
Economics. This isn’t hard.
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