An inflation gauge closely tracked by the Federal Reserve surged 6.6% in March compared with a year ago, the highest 12-month jump in four decades and further evidence that spiking prices are pressuring household budgets and the health of the economy.
WASHINGTON —
The switch to services helps restrain inflation because prices are rising more slowly for services than for goods.Excluding the especially volatile food and energy categories, so-called core prices rose 5.2% in March from a year earlier. That was slightly below the 5.3% year-over-year increase in February, and it was the first time that 12-month figure has declined since February 2021, before the inflation spike began. And on a month-to-month basis, core prices rose 0.
Consumers increased their spending by 1.1% last month, more than many economists had expected. The gain largely reflected higher prices at the gas pump, grocery store and other places where Americans shop for necessities. But even adjusted for inflation, spending rose 0.2%. That decline helps explain why Americans are taking an increasingly negative view of the economy. About one-third of respondents to a Gallup poll, released Thursday, cited inflation as the most important financial problem their family faces today, up from fewer than one in 10 who said so a year ago.
High inflation and strong wage increases are leading the Federal Reserve to plan a series of sharp interest rates hikes in the coming months. The Fed is set to raise its benchmark short-term rate by a half-point next week, a faster move than its typical quarter-point hike and the first increase that large since 2000.
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