(April 12, 2024) -- Economists around the globe gasped at the latest March Consumer Price Index (CPI) data, which revealed creeping inflation isn’t going away just yet.
Surging gas prices and sky-high mortgages and rent caused inflation to rise more than expected in March, adding to Americans’ prolonged and painful battle with high costs. That could force the Federal Reserve to keep its punishing rates higher for longer.
US consumer prices picked up again last month, vaulting to a 3.5% increase for the 12 months ended in March, according to the latest Consumer Price Index data released Wednesday by the Bureau of Labor Statistics.
That’s up considerably from February’s 3.2% rate and marks the highest annual gain in the past six months. Wednesday’s report further highlights that the path to lower inflation remains extremely bumpy. It continues to drag down Americans’ hard-earned finances, preventing any loosening of monetary policy from happening soon.
- By the numbers: In March, the Consumer Price Index (CPI) surged by 3.5% YoY, exceeding the Fed’s target of 2%, and rose by 0.4% MoM. The CPI release and a strong jobs report have raised concerns about the potential delay in anticipated interest rate cuts.
- Consumer pressure: The agency said rising gas, rent, and mortgage costs accounted for over half of the monthly increase in the inflation index. Energy prices increased by 1.1% from the previous month, adding pressure to household budgets. The shelter segment also registered significant increases, contributing to the broader inflationary pressures. This combination signals tough times for consumers trying to keep up with essential spending.
- Higher for longer? In JPMorgan Chase’s latest annual report, Jamie Dimon’s letter to shareholders said 8% interest rates are still possible. A higher rate environment from persistent inflation means further delay in recovery for CRE. However, it also creates investment opportunities for distressed assets.