Inflation skyrocketed to 8.5% in March, highest since 1981 (video)

Consumer prices in the United States climbed 8.5 percent from a year earlier in March, setting a new 40-year high, according to the Labor Department.

WATCH the news video on high inflation explained:

The Price Index, which determines the value of a basket of goods and services, increased by 1.2 percent in March after rising by 0.8 percent in February, indicating that inflation picked up last month. Core inflation, which excludes volatile food and energy expenses, increased by 6.5 percent over the previous year.

Gas prices rose 18 percent in March to a record-high average of $4.33 a gallon, accounting for over half of the current increase in inflation. Food and shelter costs have also risen, with plane flights, health and auto insurance, and furnishings all adding to the rise, per a report.

Used vehicle and truck prices, which were a significant driver of inflation last year, declined 3.8 percent in March, which is good news for consumers.

Despite the fact that prices continue to rise, some experts believe inflation has peaked and will fall during the rest of the year.

“The monthly rises in clothing, entertainment, and eating away from the home were all weaker than in recent times,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, stated in a research release, “possibly suggesting that the peak upward push on service-sector salaries is ended.”

Another glimmer of hope is that core inflation, despite reaching its highest level since 1982, was not as catastrophic as experts had predicted, thanks to lower pricing for various items and, in particular, used vehicles.

While it’s absurd to expect individuals to ignore skyrocketing petrol costs and grocery store prices, the Federal Reserve pays more attention to core inflation when determining policy since it’s less unpredictable. On a month-over-month basis, core inflation has slowed to its lowest level since September.

The Associated Press quoted Brian Jacobsen, senior financial strategist at Allspring Global Investments, as saying, “Hopefully this is as bad as it gets.” “The danger is that a hot labor market may become chilly as a result of increasing food, gasoline, and finance expenses. This is a period in which economic resilience will be put to the test.”