U.S. Consumer Prices Jump in March After Stimulus as Economies Reopen

Consumer prices in the U.S. jumped 0.6% in March from a month earlier, just a tad more than the expectations of a 0.5% gain as consumers, armed with cash from the $1.9 trillion stimulus, flocked to buy more durables and groceries.

On a year-over-year basis, the index rose 2.6%, the most since August 2018.

Core CPI, which excludes food and energy costs, increased 0.3% in March and 1.6% over the same month last year.

The rise in inflation was expected. It was in March last year when the U.S. and the rest of the world was just trying to absorb the impact of the pandemic — eventually a catastrophe for many countries and millions of people.

Governments all over the world and central banks let loose an unprecedented supply of money that was bound to push up inflation. But with employment still below desired levels and the effects of the pandemic still fresh, inflation remains at a comfortable level under the watchful eyes of the Federal Reserve.

Fed officials expect GDP to grow around 6.5% this year, which would be the fastest increase since 1984.

Chairman Jerome Powell has, on more than one occasion, ruled out rate hikes for the foreseeable future.

That hasn’t convinced bondholders, with government bond yields rising to their highest levels since before the pandemic.