Inflation hit another record high this week, jumping 8.5% year over year in March. Cheddar News speaks with  Jonathan Silver, Founder and CEO of Affinity Solutions who breaks down the latest numbers. 

Cheddar's News Wrap

Consumer Price Inflation Hits a New 40-Year High in March

Welcome back to cheddar news wrap today is Wednesday april 13th 2022. I'm ken, buffa in new york city, Hannah has the night off, but I'm glad you're here with me. All right, you might have noticed it at the register. Everything nowadays costs more way more and continues to cost more. The Labor Department releasing new data this week showing inflation rose 8.5% from a year ago, soaring at its fastest pace in 40 years. The rise in prices is driven by strong consumer demand, supply chain disruptions and skyrocketing energy costs related to Russia's invasion of Ukraine joining me now, Jonathan Silver founder and ceo of affinity Solutions, a global insights firm tracking consumer purchasing habits, Jonathan, the consumer price index measures, a wide ranging basket of goods and services. So what do you read into the latest numbers? Thanks for having me ken. Um yeah, we're seeing a lot of concern about the inflation at 8.5% overall when you strip out food and energy is actually 6.5% year of the year, but I think it's a little bit more scary than it really is as we look forward over the next few months. Um as we ended the month of March, we started seeing gas prices come down fairly significantly. Um and we believe that some of the supply chain issues that have been at least one of the key drivers of inflation will start to diminish as alternative sources of supply start coming into into the supply chain. So we're not as concerned as some of the pundits are saying out there in the market now, what are some of the sectors that were hit by inflation the hardest? Obviously gas. You know, if we just look at March overall gas, obviously it was huge. That accounted for something like half of the of the price jump year of a year, used cars and consumer electronics dropped in price, which is obviously it was off a pretty high base. Um we were seeing shelter costs, which was huge where rental costs went way up. We get data in every day and about 100 million consumers and affinity solutions. So we're seeing these things in almost real time. Um, some of the categories that were up in price were health and personal care. We look a lot at differences between income groups and how they respond to inflation. And when we see um certain categories like personal care up and then we unpack that and look at lower income and higher income. Uh you know, the differences in behavior among high and low income groups were concerned because the low income groups are spending a lot less and the higher income is sort of carrying the economy. Um other categories, food went up 1% in prices for the month, close to 9% for the year. There's um you know rice and ground beef and fruits and vegetables all went up pretty significantly in the month of March. And then of course as you alluded to energy prices Are up 11% and 32% as we look at month over month and year of a year, gas prices up 18.3% for the month. So it's it's scary when we start looking at those, but then we look ahead and we start to see relief coming around the corner. When is relief coming around the corner? Which corner is it? How do I get to that corner as fast as possible? When will these prices john go down? We believe you're going to start seeing that in april May obviously these are the March numbers and Uh it's off a you know, a pretty low base prices were a little bit down in March of 2021 rather 2021. And so you're seeing the price increases a bit accentuated as we go out into april and May, we're going to start seeing a relief there. You're not gonna see 8.5% year of the year as we're seeing in the month of March. Now, how concerned are you between the gap of inflation and wages? Yeah, so the good news is, you know, we're not seeing um the precursors of recession, I know other people are feeling differently about this because you typically wouldn't see employment as high as it is, wages are increasing, there's still a pretty high demand for labor and when there's high demand and low supply, uh those, those dynamics result in increases in wages. And we're seeing that is it as as much as inflation has been. No, but it is certainly helping defray the costs and the pressure, particularly among low income groups on the inflation that we've been seeing in March, in january february before that. So my next question is, what action from the government will we see to help fight inflation a bit? We're hearing about the Fed increasing rates. But is there anything else that can be done? Obviously, gas is huge, right. If not only, you know, it tends to get an outsized View when people look at gas. B but it's only three or 4% of a typical household budget, but it gets an outside view, but because it's a raw material and so many other things, it does have an impact on the cost of goods for many other products that are out there. We see the government doing things like opening up the Strategic Petroleum Reserve biden has done that. There there is work that's being done right now to relieve some of the taxes on gas. I think new york state is an example of that. They've cut taxes on gas by 16 cents from last June until the end of the year. And we think, you know, biden is uh, is contemplating something similar. And we're also seeing that they're opening up ethanol blended gas, which is not E. P. A. Approved, but it's going to reduce some of the pressure on fuel. So fuels certainly one where we're expecting to see some relief. Um, and a number of the other supply chain issues that were driving, you know, prices up on cars. We think the supply chain is going to become much more, uh, much less of an issue as we look forward in a number of categories, from furnishings to electronics. Alright, Jonathan Silver founder and Ceo affinity solutions. John thanks for setting us straight. We appreciate it. And if you have a few bucks extra, just let me know.