According to the latest data released by the U.S. Bureau of Labor Statistics, inflation in March reached 8.5%. This means that on average goods and services were 8.5% more expensive on March 2022 than on March 2021. To put it plainly, $1 in March 2022 dollars will buy you the same amount of goods that $0.92 would get you one year ago. This is the highest year-over-year inflation rate reported in the U.S since December 1981, over 40 years ago. It is also worth noting that the year-over-year inflation rate ha been steadily rising since September of last year.
Inflation for food reached 8.8% in March, to outpace inflation for all items by 0.3 percentage points. However, the main driver for inflation in March was energy. Inflation within this sector reached a staggering 32% in March 2022.This reflects the steep increase in oil prices during the period, as a result of the Russian-Ukrainian conflict that started in late February. According to the U.S Energy Information Administration Brent Spot prices peaked on March 8, at $133.18 a 93% increase when compared to the same date from a year prior. Meanwhile, Cushing, OK WTI Spot Prices peaked at $123.64 a 90% increase when compared to the same date from a year prior.
Despite the record levels of inflation, at the time of writing this note markets are performing well enough, as reported by cnbc.com (DIJA +0.68%, S&P500 + 1.02%, NASDAQ 1.80%). This is in part because it is expected that the Federal Reserve will raise interest rates in the following months, this should help control the record levels of inflation the economy has been experiencing.