The US Consumer Price Index (CPI) soared to 8.5% in March this year, hitting its highest climb since 1981 and sending shockwaves across the country as people braced for skyrocketing costs.
The high rate of inflation was reportedly in line with market expectations, which had adjusted for consistently above-forecast CPI prints over the last several months.
The US Labour Department reported that Russia’s invasion of Ukraine had driven energy costs upwards, with the CPI also highlighting an increase in the cost of everything from food to rent expenses.
“It is worth noting that inflation measures in the services sector, which make up close to 60% of the CPI measure, have continued their climb higher,” said Validus Risk Management senior associate Caleb Thibodeau.
“In particular, shelter costs which alone account for 33% of CPI, have printed at 5% year-over-year without accounting for a scorching housing market.”
“This reflects the continued climb of living costs outside of food and energy as well.”
The price surge followed February’s 40-year record climb of 7.9%, resulting from the knock-on effect of supply chain disruptions and oil prices due to economic sanctions against Russia.
The country’s gasoline index rose 18.3% in March and represented over half of all products’ increase across the month.
Food prices also increased 8.8% since the same period in 2021, with a 3.2% rise in rice and potatoes, a 3.8% spike in canned fruit and vegetables and a 2.1% uptick in ground beef.
“Overall, inflation in food and energy will continue to draw the most concern at home and abroad,” said Thibodeau.
“The security of global supply and supply chains in each of these commodity sectors will most certainly be the driving geopolitical force over the coming years, with a high likelihood of outside shocks.”
It will be worth keeping an eye on the more secure investments going forward in the next stage of 2022, as the market looks set for a considerably turbulent period.