Inflation Jumps to 8.5% in March, Fastest Climb in 40 Years

An ongoing storm of supply chain constraints, consumer demand and overseas conflict is causing inflation to rise at the fastest rate since 1981.

learn more about Madeline Garfinkle

By Madeline Garfinkle

Inflation has been steadily increasing for months, but as of March it jumped 8.5% from a year ago — the fastest increase in 40 years, with a jump of 1.2% from February to March — the largest month-to-month leap in 17 years.

Ongoing supply chain constraints, increasing consumer demand and tensions between Russia and Ukraine intensified an already steady increase in the cost of living, with the Labor Department reporting on Tuesday that the consumer price index (CPI) has now hit record highs.

The acceleration was most notably heightened by the cost of gasoline, which jumped to 18.3% last month, accounting for more than half of the overall rise in prices. The surge in oil prices might be the indicator of the effect of the Russia and Ukraine conflict on the U.S. economy.

Related: What the Invasion of Ukraine Really Means for Business

As inflation rises, many Americans are waving goodbye to whatever wage gains they've seen over the past year. According to the Department of Labor, real average hourly earnings decreased 2.7 percent, seasonally adjusted, from March 2021 to March 2022.

The rising cost of, well, everything, is further intensifying the already prevalent labor shortage and supply chain crisis — variables that will directly affect small business owners first and hardest.

With inflation being the biggest problem for small businesses, and quality labor being the second, business owners are faced with a major challenge in balancing increased wages to incentivize workers and keeping prices competitive while overall costs skyrocket.

According to the National Federation of Independent Business' Small Business Optimism Index for March, the percentage of small business owners expecting better conditions within the next six months decreased by 14 points — the lowest score ever reported in the survey's 48-year history.

Related: 4 Ways to Protect Your Business From Inflation

The Federal Reserve is also tasked with balancing if it can successfully keep inflation at bay without prompting a recession. The Fed is positioned to raise interest rates by 0.5% at its next meeting (double the March rate), as an assertive approach to steadying inflation.

Fed chair Jerome Powell has remained optimistic regarding its ability to get inflation under control without causing economic collapse. "All signs are that this is a strong economy, and one that will be able to flourish in the face of less accommodative monetary policy," Powell told reporters at the Fed meeting in March.

The next policy meeting is in May.

Madeline Garfinkle

Entrepreneur Staff

Editorial Assistant

Madeline Garfinkle is an Editorial Assistant at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Marketing

6 Ways to Wring All the Value from Your Earned Media Coverage

Press coverage can help your brand gain visibility and increase credibility — but not if no one sees it. What can you do to get more value from the media placements you've worked so hard to earn?

Thought Leaders

5 Small Daily Habits Self-Made Millionaires Use to Grow Their Wealth

We've all seen what self-made millionaires look like on TV, but it's a lot more subtle than that. Brian Tracy researched what small daily habits these successful entrepreneurs adopted on their journey from rags to riches.

Business Solutions

What Bill Gates and Steve Jobs Taught Me About Getting to Know Your Customers

Despite the push toward chatbots and technology-driven customer service, nothing can replace determining what your customers want through personal social interaction.

Business News

Out With the Kibble and In With the Steak. The World's Richest Dog Has a Net Worth of $400 Million – And a New Netflix Docuseries Too

'Gunther's Millions' is set to unpack the pooch's mysterious fortune and what those around him have done with his inheritance.

Living

Invest in Yourself: 10 Things Every Working Woman Should Do This Year

When striving for success, it is easy to forget about your mental and physical health. But without health, you cannot fully succeed. Follow these ten lifestyle strategies for success in your personal and professional life.