Another month, another four-decade high for inflation.
For the 12 months that ended in March, consumer prices rocketed 8.5%. That was the fastest year-over-year jump since 1981, far surpassing February's mark of 7.9%, itself a 40-year high.
The Federal Reserve never anticipated inflation this severe or persistent. Back in December 2020, the Fed’s policymakers had forecast that consumer inflation would stay below their 2% annual target and end 2021 at around 1.8%. The Fed is making a high-risk bet that it can slow the economy enough to rein in inflation without weakening it so much as to trigger a recession. The overall economy is healthy, with a robust job market and extremely low unemployment. But many economists say they worry that the Fed's steady credit tightening will cause an economic downturn.Good news — mostly.
Suddenly, businesses had to scramble to meet demand. They couldn’t hire fast enough to fill job openings or buy enough supplies to meet customer orders. As business roared back, ports and freight yards couldn’t handle the traffic. Global supply chains seized up.With demand up and supplies down, costs jumped. And companies found that they could pass along those higher costs in the form of higher prices to consumers, many of whom had managed to pile up savings during the pandemic.
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