U.S. inflation surges 8.5 pct in March, hitting fresh four-decade high

The latest data is another reminder that inflation has been persistently high, which would warrant the U.S. Federal Reserve's more aggressive rate hikes at its upcoming policy meetings.

The CPI, which measures the prices of a basket of goods and services from gasoline to groceries and rent, came in at 8.5 per cent in March, slightly higher than the estimated 8.4 per cent.

The CPI climbed 1.2 per cent last month, said the Labor Department, adding that rising costs of energy, living and food due to the Russia-Ukraine conflict and supply chain interruptions contributed to the inflation jump.

Excluding the volatile food and energy categories, core prices jumped 6.5 per cent in March from a year earlier, the hottest since August 1982, after rising 6.4 per cent in February. The so-called core CPI nudged up 0.3 per cent following a 0.5 per cent growth in February.

The gasoline index rose 18.3 per cent in March and accounted for over half of the items’ monthly increase, said the report, adding that the food index rose 1.0 per cent.

U.S. Federal Reserve Governor Lael Brainard recently said it is "of paramount importance" to get inflation down, noting that the central bank is "prepared to take stronger action" if inflation indicators show such action is warranted.

According to the minutes of the Fed's March policy meeting released last week, many participants noted that one or more 50 basis point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified.

The central bank could begin reducing the size of its balance sheet as soon as May, with officials signalling their support for a monthly cap of 95 billion U.S. dollars, a much faster pace of decline in securities holdings than over the 2017-19 period.