Inflation in the US rose by 8.5% in March from 2021, the biggest year-over-year increase since December 1981. The US Consumer Price Index report released today (April 12) is the first since the war in Ukraine triggered Western sanctions on Russia which have caused global food and energy prices to spike.
The price of gasoline in the US rose by more than 18% in March, accounting for half of the overall spike in consumer prices last month. US residents also paid much more for used cars, hotels, and airfare last month compared to the previous year. Fuel oil was the category with the steepest price hike, increasing by 70% from March 2021.
US president Joe Biden announced on March 31 that the government would tap into its strategic reserves to temper rising gas prices, selling 180 million barrels over the next six months. While the average price of gas in the US has dropped by about 23 cents from the previous month, some analysts told Reuters tapping into the stockpile without a plan to replenish it quickly could make oil prices more volatile on the long-term.
The Biden administration is also expected to announce today that the Environmental Protection Agency (EPA) will allow the widespread sale of 15% ethanol blend this summer in order to address high gas prices. This type of fuel is typically prohibited between June and September due to concerns it causes pollution in high temperatures.
While the US saw energy prices rise more than any other category in March, the cost of other everyday items is also historically high. The cost of food rose by 8.8% in March from the previous year, with cereal, flour, and meat seeing some of the biggest hikes. Bacon is now 18% more expensive than it was last year. The cost of rent also rose by 0.6% in March, and was 5% more expensive than in 2021.
The Federal Reserve has seven interest rate hikes planned for this year to address concerns about US inflation.