Inflation has not only been higher than analysts expected in March, but has also driven up the cost of expenses such as car insurance and elder care by more than 10% over the past year.
Overall, consumer prices rose 0.4% from February to March, bringing the annual inflation rate for the United States to 3.5%, according to the latest Consumer Price Index (CPI) report. .
Contributing to the increase is the shelter index, which has increased 5.7% over the past year and accounts for more than 60% of overall annual inflation. Gasoline prices have also been a recent driver of inflation: The average gallon of gas now costs $3.62, up more than 22 cents from a month ago due to rising oil prices, according to AAA.
The Federal Reserve’s long-term target for inflation is 2%. Wednesday’s warmer-than-expected March CPI reading could mean officials will have to keep interest rates high for a longer period of time to achieve that goal.
“In a word, the report is discouraging for the Fed and the prospects for a cut in June,” economists at Bank of America wrote in a note. “Inflation is proving sticky.”
Of all the items tracked by the CPI, two relatively small indexes posted the biggest gains. The price of video discs and other media rose 30.1% over the same period last year, outpacing all other items after a peak of 14.7% from February to March. (Fortunately, you probably won’t be buying too many video discs in 2024.)
The second fastest growing category is juice and frozen non-carbonated drinks, up 27.5% since March 2023.
Some of the other indexes seeing double-digit price growth are larger CPI categories and more relevant to everyday Americans. The 22.2% year-over-year increase in auto insurance prices is certainly the most notable: Premiums are skyrocketing as insurance companies raise rates to deal with a surge in costly claims after car prices have soared during the pandemic.
Here are the eight expenses for which prices have increased at least 10% since March 2023, based on the latest CPI data:
- Video discs and other media: 30.1% increase.
- Frozen juices and non-carbonated drinks: 27.5%
- Motor insurance: 22.2%
- Repair of household items: 18%
- Home care for disabled and elderly people: 14.2%
- Automotive repair: 11.6%
- Raw roast beef: 11.2%
- Domestic services: 10.9%
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