As inflation has risen, so have consumer prices, which are the highest they have been in over 40 years.
Consumer prices rose 8.5% in March, slightly hotter than expected and the highest since 1981
Prices that consumers pay for everyday items surged in March to their highest levels since the early days of the Reagan administration, according to Labor Department data released Tuesday.
The consumer price index, which measures a wide-ranging basket of goods and services, jumped 8.5% from a year ago on an unadjusted basis, above even the already elevated Dow Jones estimate for 8.4%.
The data reflected price rises not seen in the U.S. since the stagflation days of the late 1970s and early ’80s. March’s headline reading in fact was the highest since December 1981. Core inflation was the hottest since August 1982.
Due to the surge in inflation, worker wages, despite rising 5.6% from a year ago, weren’t keeping pace with the cost of living. Real average hourly earnings posted a seasonally adjusted 0.8% decline for the month, according to a separate Bureau of Labor Statistics report.
The inability of wages to keep up with costs could add to inflation pressures.
Fox Business/Talia Kaplan
The ‘real cure’ for inflation is keeping US dollar stable: Steve Forbes
Steve Forbes, chairman and CEO of Forbes Media, weighed in on the latest inflation data on Tuesday shortly after its release, blasting the Federal Reserve for its approach to curb price hikes.
Forbes, who wrote a book about inflation, explained the “real cure” to curb the price hikes, arguing that the key is keeping the U.S. dollar stable.
“I think what you’re seeing unfolding now is really conflation of two kinds of inflation, one is the chain disruptions we’ve had and that’s raising prices. We are going to see it in food with what’s happening in Ukraine,” he told “Mornings with Maria” on Tuesday.
“But the big thing long-term that is very, very destructive is the Federal Reserve undermining the value of the dollar.”
He then pointed to the rallying price of gold.
This year, gold prices have popped amid the conflict overseas. Analysts have argued that gold’s role as an inflation hedge appears to be buoying the metal.
China’s lockdowns could trigger a logistics snarl that may ‘dwarf’ 2020 and 2021
Many goods are stuck in China right now as a result of the Covid lockdowns and it could become a “big problem” for the global economy, according to business consultant Richard Martin.
“Many of the things that we use around the world that’re manufactured, have components from China and we’re about to see a logistics snarl that’ll dwarf anything in 2020 or 2021,” Martin, managing director at IMA Asia, told CNBC’s “Street Signs Asia” on Tuesday.
“China is 20% of global demand but its role in supply chains is much bigger than that.”
Since the early months of the pandemic, the global economy has struggled with supply chain challenges due to a mix of factors — such as logistics services struggling to keep up with trade volume, or Covid surges in parts of Asia that threatened to disrupt the flow of goods.
The war in Ukraine, which broke out in late February after Russia invaded the country, has further fueled those concerns.
“The outlook you’ve got for the global economy is getting pretty dim now — Europe faces a war on its doorstep, the United States has got big interest rate hikes coming through which could hit the U.S. consumer and in China, they’re really slowing the economy down,” Martin said.