On The Money — Inflation hits highest annual rate since 1981

The inflation figures are out and they show an 8.5% annual jump in consumer prices, the fastest rate of increase in four decades.

Today, we’ll also look at which commodities have seen the biggest price increases, the blame game around rising costs, and how the Federal Reserve can fight inflation.

But first, see which company is tapping into its “strategic donut reserve” to fight inflation.

welcome to money, your nightly guide to everything related to your bills, bank account, and bottom line. For The Hill, we are Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Did someone forward this newsletter to you? Subscribe here.

Soaring consumer prices fueled by the Russian-Ukrainian war

Consumer prices rose 1.2% in March and 8.5% over the past 12 months as the war in Ukraine pushed inflation even higher, according to data released Tuesday by the Department of work.

The Labor Department’s consumer price index (CPI), which tracks inflation, soared in March as Russia’s invasion of Ukraine sparked sharp price increases in the Mondial economy. The annual rise in inflation in March was the fastest since December 1981.

The background: Inflation had already risen before the war in Ukraine, driving up the prices of food, gasoline, housing, automobiles and a wide range of basic consumer goods. The outbreak of war reduced the global supply of crude oil, wheat, minerals and other key exports from Russia and Ukraine in high demand but now eaten away in the war effort or sanctions .

  • Food prices are up 8.8% in the past 12 months and 1% in March alone, with grocery prices rising 1.5% and restaurant and convenience food prices up just 0.3%.
  • Gasoline prices are up 48% on the year after rising 18.3% in March, and fuel oil prices rose 22.3% last month alone.

The White House and Democrats have been quick to blame inflation for the impact of the war – a dynamic they call “Putin’s price hike”. But the March inflation report showed prices rising across the economy and in areas relatively isolated from the war.

Sylvan breaks it down here.

Read more: Inflation hits groceries – Fish, meat up 13.4%, limes at 99 cents

BLAMES GAME

Manchin on inflation: Biden administration ‘didn’t move fast enough’

Sen. Joe Manchin (DW.Va.) blamed the Biden administration and the Federal Reserve for rising inflation on Tuesday after Labor Department data showed inflation rose 8.5% in course of the last 12 months.

“The Federal Reserve and the administration did not act quickly 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 seeking blame. The American people deserve the truth about the reasons for record inflation and what must be done to control it,” he added.

Manchin called the new data a “scary story about how these taxes on Americans are completely out of control,” eating away at incomes and savings.

  • Manchin has been raising concerns about inflation for months, but his remarks could be used by the GOP in attacks on Democrats.
  • Manchin’s statement is also another red flag for nascent Democratic hopes to revive a sweeping social and climate spending bill.
  • Manchin has long pointed to inflation as one of his main concerns over adopting a bigger, better agenda, and said on Tuesday: ‘We can’t move our way to a balanced and healthy economy. and continue to increase our national debt by $30 trillion.”

Learn more about The Hill’s Jordan Carney here.

Read more: GOP lawmaker on inflation: Democrats’ fiscal policy was ‘a match that sparked the ignition’

INTERVIEW WITH PHILLY FED CHIEF

Fed’s Harker says bank needs to ‘be careful’ in fighting inflation

Patrick Harker, president of the Federal Reserve Bank of Philadelphia, said on Tuesday the central bank was trying to quell record inflation without derailing an otherwise strong economy.

In an interview recorded for The Hill’s “Future of Jobs” summit, Harker said the Fed needed to strike a careful balance between halting rapid price growth and slowing the economy.

“The economy is strong,” Harker said, citing the gain of nearly 1.7 million jobs in 2022 and record economic growth last year.

“We see a lot of good signs,” he continued. “What we don’t want to do is spoil the good stuff by being too aggressive on inflation. We have to act, but we have to be careful at the same time.

  • Harker’s comments come amid growing concern among some economists and investors about the Fed’s ability to stop soaring inflation without triggering a recession.
  • Harker said he was “very concerned” in particular about a sharp rise in gasoline prices, which “disproportionately hits low-to-middle income families.”

Find out more here from Sylvan.

AIR FARES ARE RISING

US flight prices jumped in March: analysis

Prices for domestic flights last month were 20% higher than pre-pandemic levels, data showed on Tuesday.

Adobe Digital Insights analysis reveals that travelers are already experiencing significant price increases. In February, flight prices were up only 5% compared to the same period in 2019, while prices in January were 3% below pre-pandemic levels.

  • The rise is driven by a recent boom in bookings. The analysis found that customers spent $8.8 billion on tickets online last month, a 28% increase from pre-pandemic levels and a 32% increase from February.
  • Major airlines were already not accommodating as many passengers as before the pandemic, and they recently cut their schedules to account for rising fuel prices, a strategy that will drive airfares even higher.

Karl has more here.

Good to know

Nearly a third of American voters say inflation is their top concern ahead of the upcoming midterm elections in November, according to a new poll.

A poll released Monday by women’s suffrage advocacy group All In Together found that 32% of women and 31% of men polled believed rising prices were the top concern that would determine their vote in the November election.

Here’s what else we’ve got our eyes on:

  • Forecasts for world trade growth in 2022 have fallen from 4.7% to 3%, largely due to Russia’s invasion of Ukraine, the World Trade Organization said on Tuesday.
  • Russian President Vladimir Putin said Tuesday that Western sanctions had “achieved some results” in affecting the Russian economy, but projected a challenge to the Kremlin’s war in Ukraine.
  • Former top national security officials allied with Big Tech are urging lawmakers to drop antitrust laws targeting U.S. tech giants in a seven-figure ad campaign.

That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. Well see you tomorrow.

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