Driven by higher food, gasoline and housing cost, consumer prices continued to accelerate in March, bringing the annual inflation rate up to 8.5% — a 40-year high. March was the sixth straight month for inflation above a 6% rate and it was the fastest annual pace since December 1981. Though gas prices have fallen slightly from their March highs, the pace of inflation will likely stay high in the months ahead as lockdowns in China threaten to exacerbate global supply-chain issues.
The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 1.2% in March on a seasonally adjusted basis, following an increase of 0.8% in February. Meanwhile, the "core" CPI, which excludes the volatile food and energy components, increased by 0.3% in March, following an increase of 0.5% in February. The price index for a broad set of energy sources rose by 11.0% in March, and the food index increased by 1.0%.
In March, the indexes for gasoline, shelter, and food were the largest contributors to the increase in the headline CPI. The gasoline index rose by 18.3% in March and accounted for over half of the headline CPI increase. Meanwhile, the food index rose by 1.0%.
The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.5% in March. The indexes for owners’ equivalent rent (OER) and rent of primary residence (RPR) both increased by 0.4% over the month. Monthly increases in OER have averaged 0.4% over the last three months. More cost increases are coming from this category, which will add to inflationary forces in the months ahead.
NAHB economist Fan-Yu-Kuo provides more analysis in this Eye on Housing blog post.