| Inflation hits highest annual rate since 1981 |
© Madeline Monroe/Greg Nash/iStock |
Inflation figures are out, and they show an 8.5 percent annual jump in consumer prices, the fastest rate of increase in four decades.
Today we’ll also look at which goods saw the largest price hikes, the blame game around rising costs and how the Federal Reserve can fight inflation.
But first, see which company is tapping into its “strategic doughnut reserve” to fight inflation.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
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Consumer price spike fueled by Russia-Ukraine war |
Consumer prices rose 1.2 percent in March and 8.5 percent over the past 12 months as the war in Ukraine drove inflation even higher, according to data released Tuesday by the Labor Department.
The Labor Department’s consumer price index (CPI), which tracks inflation, spiked in March as Russia’s invasion of Ukraine triggered sharp price increases across the global economy. The March annual increase in inflation was the fastest since December 1981.
The background: Inflation had already been rising before the war in Ukraine, pushing up prices for food, gasoline, shelter, automobiles and a wide range of basic consumer goods. The outbreak of the war has reduced the global supply of crude oil, wheat, minerals and other key exports from both Russia and Ukraine in high demand, but now snarled up in the war effort or sanctions. - Food prices rose 8.8 percent over the past 12 months and 1 percent in March alone, with prices for groceries rising 1.5 percent and prices for restaurant and pre-prepared food up just 0.3 percent.
- Gasoline prices were up 48 percent on the year after an 18.3 percent increase in March, and fuel oil prices rose 22.3 percent last month alone.
The White House and Democrats have been eager to blame inflation on the impact of the war — a dynamic they call “Putin’s price hike.” But the March inflation report showed prices rising broadly through the economy and in areas relatively insulated from the war.
Sylvan breaks it down here.
Read more: Inflation hits the grocery store — Fish, meat up 13.4 percent, 99 cent limes |
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Manchin on inflation: Biden administration ‘failed to act fast enough’
Sen. Joe Manchin (D-W.Va.) blamed the Biden administration and the Federal Reserve for rising inflation on Tuesday after Labor Department data found that inflation had increased by 8.5 percent over the past 12 months.
“The Federal Reserve and the Administration failed to act fast enough, and today’s data is a snapshot in time of the consequences being felt across the country,” Manchin said in a statement.
“Instead of acting boldly, our elected leaders and the Federal Reserve continue to respond with half-measures and rhetorical failures searching for where to lay the blame. The American people deserve the truth about why record inflation is happening and what must be done to control it,” he added.
Manchin called the new data a “chilling story about how these taxes on Americans are completely out of control,” and one that is eating away at incomes and savings. - Manchin has been raising concerns about inflation for months, but his remarks may be used by the GOP in attacks on Democrats.
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Manchin’s statement is also another red flag for nascent Democratic hopes of reviving a sweeping social and climate spending bill.
- Manchin has long pointed to inflation as one of his primary concerns about passing a larger Build Back Better package, and said on Tuesday, “We cannot spend our way to a balanced, healthy economy and continue adding to our $30 trillion national debt.”
Read more here from The Hill’s Jordain Carney.
Read more: GOP lawmaker on inflation: Democrats’ fiscal policy was ‘match that set off the kindling’ |
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INTERVIEW WITH PHILLY FED CHIEF |
Fed’s Harker says bank must ‘be careful’ fighting inflation
Patrick Harker, president of the Federal Reserve Bank of Philadelphia, said Tuesday the central bank is attempting to quell record high inflation without derailing an otherwise strong economy.
In a recorded interview for The Hill’s “Future of Jobs” Summit, Harker said the Fed needs to strike a careful balance between staunching rapid price growth and pushing the economy into a slowdown.
“The economy is strong,” Harker said, citing the gain of nearly 1.7 million jobs in 2022 and a record stretch of economic growth last year.
“We’re seeing lots of good signs,” he continued. “What we don’t want to do is ruin the good things by being too aggressive in terms of inflation. We need to take action but need to be careful at the same time.” -
Harker’s comments come amid increasing concern among some economists and investors with the Fed’s ability to stop soaring inflation without triggering a recession.
- Harker said he was “very worried” in particular about a steep increase in gas prices, which “disproportionately hits the low- to moderate-income families.”
Check out more here from Sylvan. |
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US flight prices surged in March: analysis
Last month’s domestic flight prices were 20 percent higher than pre-pandemic levels, according to data released Tuesday.
The analysis from Adobe Digital Insights reveals that travelers are already experiencing significant price hikes. In February, flight prices were only up 5 percent from the same period in 2019, while January prices were 3 percent lower than pre-pandemic levels. -
The uptick is driven by a recent boom in bookings. The analysis found that customers spent $8.8 billion on tickets online last month, a 28 percent increase from pre-pandemic levels and a 32 percent increase from February.
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Major airlines already weren’t seating as many passengers as they were before the pandemic, and they’ve recently cut down on their schedules to account for higher fuel prices, a strategy that will drive up airfares further.
Karl has more here. |
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Nearly a third of American voters say that inflation is the top concern for them ahead of the upcoming November midterm elections, according to a new poll.
A poll released on Monday by women’s voting advocacy group All In Together found that 32 percent of women and 31 percent of men surveyed felt that rising prices are the top concern that will determine how they vote in the November elections. Here’s what else we have our eye on: - Forecasts for global trade growth in 2022 have declined from 4.7 percent to three percent, in large part due to Russia’s invasion in Ukraine, the World Trade Organization said on Tuesday.
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Russian President Vladimir Putin said Tuesday that Western sanctions have “achieved certain results” in impacting the Russian economy but projected defiance about the Kremlin’s war in Ukraine.
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Former high-ranking national security officials allied with Big Tech are urging lawmakers to abandon antitrust legislation targeting U.S. tech giants as part of a seven-figure ad campaign.
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That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. |
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