American consumer prices increased at their fastest rate in more than eight years last month as the cost of fuel rose and the recovery of the world’s largest economy gathered pace.
The headline rate of inflation was slightly higher than expected as the Federal Reserve continues to reassure markets that any resurgence is likely to be temporary.
The US consumer price index rose by 0.6 per cent between February and March, up from 0.4 per cent the previous month. On an annual basis it jumped from 1.7 to 2.6 per cent.
With more than three million vaccinations administered each day and Covid-19 restrictions loosening across much of the country, the US economic recovery is expected to boost both demand and inflation.
Jerome Powell, chairman of the Federal Reserve, believes the rise in prices will be “transitory” and has moved to dampen fears of an overheating economy. Policymakers at the central bank have repeatedly signalled their intention to stay the course and preserve their current support, maintaining interest rates at close to zero for some time to come and using its huge asset purchasing scheme.
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A sharp increase in petrol prices drove headline inflation higher last month. A 9.1 per cent increase in the petrol index accounted for nearly half the overall figure’s seasonally-adjusted rise, according to the US bureau of labour statistics, which publishes the official data.
When stripping out fluctuating energy and food prices, the consumer price index was up by 0.3 per cent on a monthly basis and 1.6 per cent on the year in March. Investors appeared unperturbed by the inflation data as US treasury yields eased lower and the S&P 500 closed at a new record, up 13.60 points, or 0.3 per cent, to 4,141.59.
• Bitcoin — often seen as a potential hedge against inflation — hit new highs before the highly-anticipated listing of Coinbase, one of the world’s most popular digital currency exchanges, in New York.
The world’s largest cryptocurrency rose by almost 6 per cent at one point yesterday to a new record of $63,396.31 amid a perceived shift from the fringes to the mainstream of global finance. It later trimmed gains to trade up 5 per cent at $63,211.85.
The direct listing of Coinbase, America’s largest cryptocurrency exchange, is set to take place today after regulators approved its application to go public.
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Bitcoin’s value has surged by more than 450 per cent in the past six months. It was created in 2008 as strings of computer code with no physical form by a software developer using the name Satoshi Nakamoto.
