U.S. inflation data hit a multidecade high last month as gas prices and rents skyrocketed, climbing to 8.5 percent, the Bureau of Labor Statistics reported Tuesday.
A survey by the financial data group FactSet had predicted that the inflation reading for March would come in at 8.4 percent year over year — the highest rate since December 1981 and an increase from February’s 7.9 percent.
Although gas prices have begun to trend downward recently, the change was not reflected in the inflation reading for March — when prices at the pump reached record highs. Gas prices jumped by 48 percent year over year, the BLS said, and climbed by 18.3 percent from February.
Meanwhile, rental rates have increased for eight consecutive months, and they are now above the pre-pandemic trend. Rents climbed by 5.1 percent in March year over year, compared with 4.2 percent in February. The average rent for a two-bedroom home in the U.S. is about $2,000, according to research from Rent.com — up by 22 percent year over year basis.
Other categories that hit at or near record highs in March included groceries, up by 10 percent year over year; new cars, up by 12.6 percent; and home furnishings, up by 10.8 percent.
“Robust pay increases have been no match for the higher costs households are facing on rent, food, electricity, gasoline, and a pervasive list of both goods and services,” Bankrate.com Chief Financial Analyst Greg McBride said in a note Friday. “The buying power of Americans is being squeezed more and more each day, and you see this reality reflected in the dour consumer sentiment readings.”
“Core” inflation, which excludes volatile food and gas prices, climbed by 6.5 percent year over year and by 0.3 percent month over month — slightly less than the figures FactSet analysts expected. The soft reading was driven by the biggest drop in used vehicle prices since 1969.
Markets’ initial to the figures was favorable, Bloomberg reported. U.S. stock prices and Treasury yields climbed, and the dollar erased early losses.