Basic living costs are skyrocketing south of the border, as the U.S. inflation rate reaches 8.5%.
Yesterday, the Labor Department announced that its consumer price index jumped 8.5% in March from 12 months earlier -- marking the largest year-over-year increase since 1981. This comes following a 7.9% hike in February. The 1.2% increase in March alone marks the biggest one month increase since 2005.
Prices for groceries, gas, housing, and other necessities have been driven up by supply chain delays, disruptions to global food and energy markets worsened by Russia’s war on Ukraine, and unwavering consumer demand. The ongoing war has inspired Western sanctions against the Russian economy, which have inevitably disrupted global markets.
According to the country's Labor Department, U.S. energy prices rose by 32% in the year to March. Gas prices drove half of the dramatic surge in inflation, while food prices were also a significant contributor.
READ: Surging Inflation Far Outpacing Effects of Raised Bank of Canada Rate
With the latest inflation figures, all eyes are on the Federal Reserve and whether it will respond by raising interest rates. Last month, the climbing inflation rate prompted the US central bank to lift its key interest rate for the first time in three years. The Federal Reserve also suggested that the interest rate will increase a number of times in 2022.
Closer to home, Canadians are left to wonder what impact the figures will have on tomorrow’s Bank of Canada announcement on interest rates. Right now, Canada’s central bank is expected to raise the overnight interest rate 0.5% to 1% -- a move that could tame the country’s red-hot housing market by making it more difficult for Canadians to borrow money. Canada’s own inflation rate hit a 30-year high of 5.7% in February.
