US inflation at a peak since 1981

(Des Moines) Prices keep climbing in the United States, where inflation hit a new high in March, and Joe Biden pointed the finger at Russia, whose invasion of Ukraine has caused a spike in gasoline prices in particular.

Posted at 6:48 a.m.
Updated at 5:48 p.m.

Julie Chabanas
France Media Agency

Inflation in March reached its highest level since December 1981. Prices rose 8.5% compared to March 2021, against 7.9% year on year in February, according to the consumer price index (CPI) released Tuesday by the Labor Department.

Inflation has been climbing steadily for a year, but accelerated further in March, the first month to fully factor in the effect of the war in Ukraine, which started in the very last days of February.

During a trip to Iowa devoted to the fight against inflation, Joe Biden used the term “genocide” for the first time to describe the situation in Ukraine.

“Your family’s budget, your ability to refuel, none of that should depend on a dictator declaring war and committing genocide on the other side of the world,” he said. he declares.

The American president deplored the additional inflationary outbreak caused by this war, assuring that “70% of the rise in prices in March comes from the rise in gasoline prices from [Vladimir] Putin “.

Between February and March, prices increased by 1.2%, more than the 0.8% from January to February. The Labor Department said in its statement that “the gasoline index rose 18.3% in March (compared to February) and accounted for more than half of the general price increase over one month”.

“Putin’s invasion of Ukraine has pushed up the prices of gasoline and food around the world,” further castigated the Democratic president, whom the Republican opposition criticizes for an inflationary economic policy.

Lower prices at the pump

The White House on Tuesday announced a series of initiatives to increase biofuel use and production, in hopes of lowering prices at the pump.

Because after having already announced historic withdrawals from the strategic oil reserves of the United States, President Joe Biden finds himself running out of levers to stem what the White House invariably calls the “Putin effect” on inflation, in a so far unsuccessful attempt to mitigate the political cost to the Democrat.

The US president, who will face a tough legislative election in November, visited a biofuel manufacturing site in Iowa, a rural Midwestern state considered politically highly strategic, on Tuesday, which had voted overwhelmingly. for Republican Donald Trump in 2020.

A glimmer of hope, however, excluding energy and food prices, so-called core inflation slowed compared to February, to 0.3% from 0.5%.

Thus, the prices of used cars, which have been driving inflation for months, fell in March (-3.8%).

On the other hand, over one year, underlying inflation accelerated, and reached 6.5%, its highest level since August 1982.

A year of high inflation

The war in Ukraine “is a very important contributor to inflationary pressures”, also commented a governor of the American central bank (Fed), Lael Brainard, during an interview with the Wall Street Journal.

The official also mentioned China’s zero-COVID-19 policy, which “seems to have a noticeable effect on the business”, and could thus weigh on supply problems.

Inflation, which reduces household purchasing power, has been above the Fed’s 2% target for a year now. The month of March is even the sixth in a row to record a price increase of more than 6%.

The CPI index is the one on which pensions are indexed, in particular. The US central bank (Fed) favors another index, the PCE, which rose 6.4% year on year in February.

The institution began in mid-March to raise its key rates, to increase the cost of credit and thus slow down consumption and investment. She also warned that she would continue to tighten monetary policy in the coming months.

The rates, which were in the range of 0 to 0.25%, are now between 0.25 and 0.50%.

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