The Consumer Price Index for March was just released. The monthly CPI number indicated that overall consumer prices roses by 0.4% in March, the same increase as the prior month. For the last year consumer prices have increased 3.5% up from 3.2% last month. With the increases since last December the proper monetary policy action is to raise interest rates now. As I have noted in prior columns, the inflation problem has not been solved.
Indeed, considering the rapid increase in oil prices over the last month or so, the CPI could hit more than 4% by June. In the recent past, the Fed has made two monetary policy errors which have resulted in the high and lasting inflation. A third mistake will be devasting. Inflation is a cancer that must be treated early and aggressively. The Fed failed to realize this in 2021 and failed again in 2023. Because of their failures inflation remains a very sticky problem. The core inflation rate is currently 3.8%, up from 3.7% last month. This core rate excludes price changes for food and energy. The core rate has remained in the 4% for the last six months. Inflation will accelerate in the coming months. Energy prices, which fell most of last year, have increased significantly. Oil prices have reached $90 per barrel, which has pushed the average price of gasoline to $3.60 per gallon nationwide. Much of the increase was incurred in the first week of Apri