The Consumer Price Index, a measure of inflation, increased 0.6 percent in March, its largest monthly increase since August of 2012, according to Labor Department data released Tuesday.
March’s reading, an increase from the 0.4 percent recorded in February, brings the unadjusted 12-month total price increase to 2.6 percent, though the comparison point from last year falls after the pandemic walloped the economy and prices temporarily dropped.
One of the biggest drivers of increased prices in March was gasoline, which rose 9.1 percent, accounting for nearly half of the overall jump. Natural gas prices also rose 5 percent. Indexes for food prices rose just 0.1 percent, but items such as cars and trucks, motor vehicle insurance, hospital services and shelter saw an uptick.
The increase appeared to be less than investors were expecting, as stock futures jumped after the report’s release.
Economists have argued that inflation was likely to bounce temporarily as the economy heats up, but the uptick could add fuel to Republican criticism of President Biden’s big spending plans.
Federal Reserve Chairman Jerome Powell has argued that inflation has remained below its 2 percent target for 25 years, and that some increases were unlikely to take hold as a regular feature of the economy. The Fed, he said, has tools to deal with inflation should it become persistent.
S&P Global U.S. chief economist Beth Ann Bovino agrees with that assessment.
“We believe the recent inflation uptick will be transitory, not the start of ‘runaway’ inflation, like some investors fear,” she wrote in a research note Monday, adding that she did not expect the Federal Reserve to increase rates until the third quarter of 2023.
The Biden administration has sought to ease some of the concerns over inflation as well, with two of its top economists arguing that long-run inflation is likely to return to a historically normal level.
“In the next several months we expect measured inflation to increase somewhat, primarily due to three different temporary factors: base effects, supply chain disruptions, and pent-up demand, especially for services,” Jared Bernstein and Ernie Tedeschi wrote in a White House blog post Monday.
“We expect these three factors will likely be transitory, and that their impact should fade over time as the economy recovers from the pandemic.”
Last week, a measure of producer prices, which look at the cost of inputs for producers, rose 4.2 percent, its fastest uptick since 2011.
–Updated at 9:06 a.m.