US Inflation Soars 8.5% (YoY) Amid Rising Food and Energy Prices

The United States Department of Labor reported that the Consumer Price Index (CPI), or inflation rate, in the US surged in March 2022. The consumer price index jumped 1.2 percent in March, following a 0.8 percent increase in February.

Compared to March 2021, US inflation surged 8.5% (year on year/YoY). This is the highest inflation rate since 1981, driven by rising oil prices due to the Russian invasion of Ukraine amidst low supply, and increased demand, as reported by the *New York Times* (April 12, 2022).

The price increases are severely impacting American households, particularly those with low incomes whose earnings are fully consumed by essential needs.

However, signs of easing price pressures for food and fuel are emerging since February 2022, as used car prices began to fall.

Several economists suggest that March marked the peak of overall inflation. However, some essential goods may see price decreases in the coming months. The average gasoline price dropped to US$4.1 per gallon on Tuesday (April 12, 2022), down from its March peak of US$4.33.

Food inflation in March 2022 rose 1% (month-to-month/m-to-m) or 8.8% (YoY). Energy inflation increased by 11.0% (m-to-m) or 32.0% (YoY). Overall inflation excluding food and energy rose 0.3% (m-to-m) or 6.5% (YoY).

“The data suggests a peak is behind us,” said Gregory Daco, chief economist at the strategy consulting firm Ernst & Young, EY-Parthenon. However, the key is to observe whether the increase in prices (excluding food and energy/core inflation) will slow down in the coming months.