The U.S. Consumer Price Index (CPI) rose 0.6% in March 2021, the biggest monthly increase in 2023, according to the Bureau of Labor Statistics. This follows a 0.4% increase in February 2021 and marks the sixth consecutive month of rising inflation.
The major drivers of the spike in inflation were rising gas prices and higher costs for used cars and trucks. Gas prices increased by 8.4%, the largest monthly increase since late 2012. Used car and truck prices rose by 6.2%, the biggest gain since November 2017.
Other categories that saw significant increases included apparel, which rose 3.3%, as well as lodging, which was up 2.5%. Prices for food and beverages rose 0.7% in March.
The U.S. inflation rate is now 1.7%, up from 0.4% in February and 0.3% in January. This marks the highest inflation rate since January 2020, before the pandemic began. Year-over-year, prices have risen 2.6%.
The increase in inflation is likely to be welcomed by the Federal Reserve, which is targeting a 2% annual inflation rate. The Fed has argued that higher inflation will help the economy recover from the pandemic more quickly.
However, some fear that rising prices could be a sign of things to come if the Fed continues to keep interest rates low. Higher inflation could erode the purchasing power of consumers, reduce savings, and lead to higher borrowing costs for businesses and households.
