Consumer prices in the United States posted their strongest jump in more than eight years in March, as more Americans get vaccinated against COVID-19 and the economy reaps the benefits of the government’s massive $1.9 trillion virus relief aid package.
The United States Bureau of Labor Statistics reported on Tuesday that its Consumer Price Index for all Urban Consumers rose 0.6 percent last month, after rising 0.4 percent in February.
That is the largest one-month increase since August 2012.
Nearly half of that gain was due to climbing petrol prices, which rose 9.1 percent in March from the month before.
Since last year, when lockdowns were sweeping the nation, grinding business activity to a halt, consumer prices rose 2.6 percent. Petrol prices saw a massive 22.5 percent year-over-year increase.
Strip out the volatile food and energy components, and the so-called “core” index rose 0.3 percent in March.
There is an intense debate among economists and policymakers as to whether inflation will become a problem for the US economy.
Many economists expected prices to take off as the economy reopened, unleashing pent-up demand and causing bottlenecks and temporary shortages of raw materials and other inputs. Fiscal stimulus is also giving consumers a lot more firepower in the form of cash to spend.
Some economists think price spikes will only be temporary. Others take a more pessimistic view, expressing concerns that the economy will overheat, prompting the Federal Reserve to raise interest rates – which cools economic growth.
Fed Chairman Jerome Powell has repeatedly said the central bank will not raise interest rates until the US economy – especially the labour market – has recovered from the coronavirus pandemic.
The US jobs market still has to recover some 8.4 million of the 22 million jobs lost to last year’s lockdowns in the spring.
In an interview on Sunday with CBS’s 60 Minutes, Powell reiterated the pledge, saying: “The Fed will do everything we can to support the economy for as long as it takes to complete the recovery.”