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.
Economists expected the CPI to rise 1.2 percent in March and 8.4 percent over the year leading into last month, in line with the data released Tuesday.
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.
“Fallout from Russia’s invasion was all over the ugly March CPI report. Prior to Russia’s aggression, oil prices were headed lower and overall inflation was peaking as pandemic-scrambled supply chains were slowly, but steadily, sorting themselves out,” said Mark Zandi, chief economist at Moody’s Analytics.
“But now with oil and other commodity prices up, a lot, the acceleration in inflation has more to run.”
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.” After months of steadily rising prices, Democrats are eager to pin the recent spike on the Russian war amid voter concern with President Biden’s handling of the economy.
“We expect March CPI headline inflation to be extraordinarily elevated, due to Putin’s price hike,” White House press secretary Jen Psaki told reporters Monday, saying the impact of energy prices will largely be to blame and that the fault lies in part with Putin’s invasion.
Even so, the March inflation report showed prices rising broadly through the economy and in areas relatively insulated from the war.
Without food and fuel prices, the CPI rose 0.3 percent in March and 6.5 percent over the previous 12 months. But shelter costs grew 5 percent over the past 12 months amid rapidly rising rents across much of the country. Costs for non-energy related services also rose 4.7 percent over the year and 0.6 percent in March.
Updated at 9:06 a.m.