The Federal Reserve uses several measures to track American inflation. One of those measures rose by 5.2% in March, but economists had expected a 5.3% increase. (source)
Here are the major drivers of general inflation.
- The war between Russia and Ukraine.
- The widespread supply disruptions across the country.
- High consumer demand coupled with worker shortages.
- The rising prices of fuel and groceries.
What does the Federal Reserve use to measure inflation?
The consumption expenditures price index measures the costs consumers pay for several goods. It excludes volatile measurements like food and energy. The index shows that core prices jumped by 5.2% in March, according to a report by The Bureau of Economic Analysis. The consumption expenditures price index is the preferred inflation gauge of the Federal Reserve. (source)
Given that the index was at 5.2%, March is the 12th consecutive month that the measure is above the central bank's target range of 2%. The 5.2% is 0.1% below February's 5.3%, the highest recorded since April 1983. It signals that prices are not falling but are leveling off. (source)
Including food and fuel caused the inflation gauge to soar from 5.2% to 6.6% for March 2022. Last month's measurement was 6.3%. The increase between February and March is the fastest pace since 1981. It reflects spikes in energy costs which are up from the previous year by 33.9%, and food is also 9.2% higher over the same period. (source)
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Disclaimer: This article is only for educational and informational purposes.