Inflation has risen to an all-time high in March, for the first time in forty years, due to various ongoing issues such as the Russia-Ukraine war, supply-chain limitations, and rising consumer demands. This inflation has washed over any benefits Americans received due to an increase in wages.
On Tuesday, the Labor Department declared that the consumer price index had risen 8.5% in March as compared to a year ago. The US is witnessing the fastest rise in inflation since December 1981. The Department also noted that February saw the most significant one-month price jump at 1.2% since 2005.
Inflation was experienced most across energy prices, which rose 11% since the last month and around 32% since previous year. Americans are paying 48% more for gas in 2022 than they were in 2021. Similarly, food prices have also peaked at 8.8% since last year.
This rise in inflation, especially in gas prices, is the direct result of the Russian war in Ukraine and how it impacted gas prices to be the highest they’ve been since 2008. The rising inflation spells trouble for the Biden Administration as his approval rating has been plummeting as consumer prices rise.
In their defense, the administration claims the price surges are due to pandemic-related constraints and issues with the supply chain. However, the GOP has narrowed it down to the administration’s spending habits and energy policies.
The inflation data will also impact the approach the Federal Reserve has been taking toward solving the problem of rising prices over the last few months. There are concerns about how central bank officials will be able to handle the crisis without plunging the economy into recession.
These concerns were addressed by Chairman Jerome Powell, who believed that the federal government could fix the issue of inflation without causing serious harm to the economy.
Powell believes that certain signs such as a strong labor market, increase in wages, and strong business and spending numbers show the economy is strong. He is certain that the economy will continue to grow and will not face a recession due to the current inflation trends.