Inflation hits another 40-year high, as recession fears loom

Inflation soared by 8.5% over the past 12 months, the federal government reported Thursday amid fears of a looming recession.

The Labor Department said the rise in the Consumer Price Index through March is the largest since 1981. Officials note this is the fifth straight month that inflation has climbed to a 40-year high, with economists saying there are few signs the rise in prices will end soon.

Americans are increasingly shelling out more of their paychecks on gasoline, food and housing at a time when the U.S. economy continues to face shortages because of the supply chain crisis.

Gasoline prices jumped 48% over the past year. Meanwhile, food prices increased 8% in the same time frame, while housing costs rose 5%.

Similarly, electricity and home heating prices jumped more than 13%. Electricity prices, in particular, rose 11.5%, while the price of natural gas increased 21.6%.

The new data paint an even worse picture when broken down by month. Between February and March, gasoline prices rose 18.3%.  

A report by the Federal Reserve last week shows that Americans are increasingly relying on their credit cards to meet everyday expenses.

“You’ve got a nearly 8% inflation rate, which is rising faster than people’s incomes,” said Stephen Moore, a former economic adviser to President Donald Trump. “People are actually losing purchasing power because inflation is like a tax on earnings.”
The Federal Reserve System has announced plans to lower inflation by aggressively hiking interest rates across the board over the coming months. Economists worry, however, that the move could trigger a recession.

Many note that the economy, wracked by supply chain issues and COVID-19 relief packages, appears primed to enter a tailspin as interest rates jump.

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