According to the U.S. Bureau of Labor Statistics the recent consumer price index showed a 3.5% year-over-year increase in March. 

What You Need To Know

  • Housing and gasoline were the major drivers for an increased CPI

  • The CPI jumped 3.5% in March compared to the year before, and is 0.4% higher than it was in February

  • Economists think that prices and interest rates will continue to rise as long as consumers follow similar spending patterns

Lack of housing is one of the leading causes for inflation, along with gasoline prices. Together, they contributed to over half of the monthly increase in the index for all items. The Consumer Price Index saw a year-over-year increase of 3.5% last month, and a 0.4% jump from February. These numbers are higher than what the federal reserve expected or were hoping for at this point of the year. 

The expectation was that the CPI increases would inch toward pre-pandemic levels, which were around 2%, however, we’ve seen a steady increase the past few months in sectors that are classified as necessities such as housing, gasoline, energy, food and health care. Housing was one of the biggest contributors to the increase, and one economics professor from Case Western Reserve University said Ohio’s lack of affordable housing is an example of what’s happening on a national level. 

“Really what’s driving those housing costs is people who are locked into a nice 3- or 4% interest rate and don’t want to necessarily sell their home and then borrow for another one at 7- or 8%,” said Jonathan Earnest who is an assistant professor of economics at Case Western Reserve University. “That’s really decreasing the amount of supply of homes on the market, which drives up prices among the people who want to buy them.” 

The lack of supply compared to the growing demand for affordable housing has put pressure on local governments to inspect zoning and building policies. However, housing isn’t the only issue contributing to inflation. One economics professor from the University of Cincinnati said that federal spending has also been an issue. President Joe Biden signed a $1.2 trillion bill at the end of March and is currently rallying for more student loans to be forgiven. The UC economist said that this might not be the right time for more government spending. 

“This week, President Biden announced an additional student loan forgiveness program,” said Michael Jones, who serves as an Economy Professor at the University of Cincinnati. “Again, that’s hundreds of billions of dollars that won’t be paid for and he’s continuing to push personal loan forgiveness while inflation rates are still high. There’s several things that can be done to bring inflation down, but I think in this election year, it’s pretty unlikely that we’ll see any of those contribute to bringing inflation under control.”

Both economists think that current pricing and interest rates will be the reality due to continued consumer spending. Besides housing and gasoline, an increase was seen in things like car insurance and energy. However, consumers have seen food prices level out over the past few months.