Consumer prices rose 8.5% in March, slightly hotter than expected and the highest since 1981

The Labor Department data shows that the prices that consumers pay on everyday items increased in March to their highest levels since the early days of the Reagan administration.

The consumer price index, which measures a wide-ranging basket of goods and services, jumped 8.5% from a year ago on an unadjusted basis.

Excluding food and energy, the consumer price index increased in line with expectations.

The data reflected price increases not seen in the U.S. since the late 1970s and early 1980s. March's headline reading was the highest since 1981 Since August 1982, core inflation has been the hottest.

However, core inflation rose less than expected, rising 3.0% for the month.

Markets reacted positively to the report despite the increases. Government bond yields declined.

The big news in the March report was that core price pressures appear to be stabilizing, according to Andrew Hunter, senior U.S. economist at Capital Economics. Hunter thinks the March increase will mark the peak for inflation as year-over-year comparisons drive the numbers lower.

Despite rising 5.6% from a year ago, real earnings still weren't keeping pace with the cost of living. According to a Bureau of Labor Statistics report, real average hourly earnings fell in February.

The Federal Reserve is expected to continue raising interest rates through the remainder of the year and into the next.

Many of the usual culprits were behind the price increases.

Food rose 1% for the month and 8.8% over the year, as prices for items such as rice, ground beef, and fresh vegetables all increased. For the month, energy prices were up 32% and gasoline prices were up 18.3%.

Shelter costs, which make up about one-third of the CPI, increased again in the month, making the 12-month gain a sizzling 5%.

The sector that has been a major driver of inflation has stopped. The prices of used cars and trucks were down for the month, but are still up on the year. Excluding food and energy, commodity prices fell.

The declines were offset by gains in clothing, services, and medical care, each of which increased 0.6% for the month. The transportation service's 12-month gain was 7.7%.

In a sign of economic recovery from a sector hard-hit during the Pandemic, airline fares jumped by 10.7% in the month and were up 23.6% from a year ago.

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