US consumer price growth is expected to have surpassed 8 percent in March following a surge in energy and food prices following Russia’s war on Ukraine, bolstering expectations the Federal Reserve will take more aggressive action to curb the highest inflation in 40 years.
The consumer price index is forecast to have risen 8.4 percent last month compared with March 2021, a pace last seen in January 1982, according to consensus forecasts compiled by Bloomberg.
The monthly rise is estimated at 1.2 percent, the fastest jump since September 2005 and a sharp acceleration from the 0.8 percent rise registered in February.
After volatile items such as food and energy are stripped out, “core” CPI is expected to have advanced 0.5 percent in March. That is in line with February’s increase, but is set to push up the annual pace to 6.6 percent.
The data, to be published by the Bureau of Labor Statistics at 8:30 am Eastern Time, reflect the immediate aftermath of Russia’s invasion of Ukraine, which has led to whipsawing prices for food and energy.
The Biden administration on Monday blamed the expected surge in prices on the war, with White House press secretary Jen Psaki saying the CPI reading was expected to be “extraordinarily elevated due to Putin’s price hike”.
Psaki noted petrol prices are up on average more than 80 cents a gallon since the invasion, which she said would drive the bulk of the increase.
Inflation expectations have in turn risen, with a new monthly survey released by the New York branch of the Federal Reserve on Monday showing that US households are bracing for much more acute price pressures.
Over the next year, consumers anticipate inflation hitting 6.6. percent, a 0.6 percentage point rise from the previous period. Expectations for the three-year outlook declined marginally but still remain elevated at 3-7 percent.
Concerns that inflation will become even more deeply entrenched in the world’s largest economy have prompted the US central bank in recent weeks to assume a more aggressive approach to tightening monetary policy.
Recommended The Fed is now poised to raise interest rates by half a percentage point at its next policy meeting in May, double the pace of its March rate rise, as it seeks to lift its benchmark policy rate to a more “neutral” level that neither aids nor constrains growth by the end of the year.