Prices climbed 8.5% in March compared to last year amid growing fears of economic slowdown

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The inflation surge in the United States picked up speed in March, as prices rose 8.5 percent compared with a year ago. It was the largest annual increase since December 1981, with energy prices spiking because of Russia’s war in Ukraine.

The White House and Federal Reserve have launched several initiatives to try and corral the rising prices, but higher costs appear to be everywhere, particularly in consumer staples that most families cannot do without. Gasoline, food, and a range of other products have become markedly more expensive, creating economic strains for households and businesses, and political problems for the White House and congressional Democrats.

The economy is now expected to grow at a slower pace later this year, in part because inflation causes families and businesses to rethink certain purchases and potentially tap the brakes on spending.

The inflation data, released Tuesday by the Bureau of Labor Statistics, showed prices rose 1.2 percent in March compared with February. Price increases for gas, shelter and food were the largest contributors to inflation, underscoring how inescapable these cost increases have become.

Inflation was relatively steady, even low, for much of the past decade, but picked up significantly as the global economy emerged from the pandemic. A number of economists and policymakers thought inflation would ease this year as supply chain issues cleared up and government stimulus faded. But Russia’s February invasion of Ukraine created a new burst of uncertainty and pushed prices even higher.

Despite a relatively strong labor market, widespread inflation has made the economy’s performance a huge vulnerability for President Biden and Democrats. The administration has tried to rebrand the recent spike of inflation as a “Putin Price Hike.” But that rhetoric does not seem to have lifted Biden’s approval rating on the economy ahead of the 2022 midterms.

World leaders have responded to Russia’s invasion of Ukraine by trying to economically isolate Moscow, but that has only led to more economic uncertainty.

Russia is one of the world’s largest producers of oil, and its invasion of Ukraine prompted the U.S. government and others to try and restrict Russia’s ability to sell energy. Those moves drove up energy costs; crude oil soared to new highs last month, and rising gasoline prices quickly followed. Russia and Ukraine are also large producers or wheat and other commodities, and prices for those products have also risen.

With gas prices still above $4-per-gallon in much of the country, the White House has tried to craft new policies to help, such as by releasing oil from the Strategic Petroleum Reserve.

And the Biden administration on Tuesday announced that the Environmental Protection Agency was going to allow a type of blended gasoline to be sold in the summer in order to create more supply, though the exact ramifications of this are unclear. Only 2,300 of the nation’s 150,000 gas stations offer the E15 gasoline that would be affected.

The move was hardly convincing to Republican lawmakers who have long criticized the Fed and White House for being too slow to combat inflation.

“Inflation just reached 8.5 percent —a new 40-[year] high—for the fifth month in a row,” tweeted Patrick J. Toomey (R-Pa.), the top Republican on the Senate Banking Committee. “Americans’ paychecks are worth less and less each month. Unfortunately, the administration’s new scheme to address soaring gas prices by forcing more ethanol into the system will likely lead to higher corn, i.e. food, prices. This must be a wakeup call for the White House.”

The March inflation report showed how far energy prices have risen in the past year. Overall, the energy index rose 32.0 percent in the past 12 months. The gasoline index grew 18.3 percent in March after climbing 6.6 percent in February.

Even as crude prices ease up in recent weeks, sticker shock at the pump continues to sour how many Americans feel about the broader economy.

Inflation explained: how prices took off

The food index rose 1 percent in March compared to February. It is up 8.8 percent compared to the prior 12 months, the largest increase since May 1981. Few categories have been left untouched. Breakfast cereal was up 2.4 percent from February to March. Rice prices rose 3.2 percent, ground beef grew 2.1 percent, and eggs were up 1.9 percent. Milk was up 1.3 percent, potatoes 3.2 percent, and canned fruits and vegetables tacked on 3.8 percent.

Rents were up 4.4 percent compared to the year before, and 0.4 percent in March compared to February alone