Dana Peterson, Chief Economist at the Conference Board, joined Closing Bell to break down March CPI numbers, and discuss how skyrocketing prices are affecting American consumers.

Closing Bell

March Consumer Price Index Reveals U.S. Inflation at 40-Year High

Okay, well, we did get that fresh economic data this morning. March. Consumer prices hitting the tape showing us inflation jumped 8.5% in March from the same time a year ago. The fastest pace of price games since december of 1981. The rise in prices driven by strong consumer demand, major supply chain disruptions and spiking energy costs related to Russia's continuing invasion of Ukraine. Joining me now is Dana Peterson, chief economist at the conference board, a nonprofit research group. Dana, thanks so much for joining. What is your reaction to the print this morning? Well, certainly this morning's print reflected the pandemic as well as the war in Ukraine. Food and energy prices expanded very aggressively in the month. Um, again, the global shocks are related to the pandemic in terms of supply chain disruptions as well as to disruptions in food and energy and also metals exports out of Russia and Ukraine, you know, 8.5% is a print that we haven't seen since the stagflation days of the late seventies, early eighties. Of course, there's a lot of free money that flooded the system stimulus when many americans needed it at the onset of the coronavirus trillions of dollars. And our consumers still showing that they do have appetite for some of these sectors At higher prices. I think we have a full screen and shelter costs at 5% in March from the same time a year ago. Food up nearly 9%. Energy costs of 32%. Transportation of 8% and airline fares viking 24% in March from the same time a year ago. Certainly that energy sector amid Russia's invasion Absolutely through the roof. Are there any signs any hopeful signs dana that inflation might be peaking at these levels? Sure. I mean there's still upside for headline inflation. Certainly food and energy prices can rise even further if the, the punishments for Russia include embargoes on oil and also for example of Ukraine is not able to uh, plant this year in the spring. But certainly prices for goods maybe uh, being a little bit or even following, we saw that new car rather use car vehicles, used car prices were down as people are transitioning away from just wanting to buy goods now they can get out there. They can buy services such as going to the movies, going to restaurants or even travel. I mean, airfares are up pretty significantly. That's a service and that reflects the fact that people are kind of over the pandemic and really looking to get back out there and engage. And of course, unfortunately the wage gains that we've seen throughout this pandemic in many ways erased for most americans by the gain that we see in inflation. Is there any indication that yes consumers, they might still have demand for services, entertainment after being cooped up in their homes for a few years, but that the consumer might start to pull back of course, because price hikes are outpacing new wage benefits. We absolutely anticipate that that prices are going to influence consumption. In our own forecast, we've cut consumption expectations for this year. We did it a month ago, cut it a little bit more this month um simply because consumers are concerned about inflation, our own consumer confidence measure shows that inflation expectations one year out or add the highest ever. Um and also consumers are kind of pulling back on on desire to buy big ticket items. Certainly as interest rates are rising, big ticket items like cars and appliances and things that require financing. So we do anticipate that inflation plus rising interest rates and even concerns about the war and financial markets will probably cause consumers to pull back and we'll see slower growth this year, relative to last year, potentially by the end of this year. Um growth at 1.7% 4th quarter, fourth quarter and fourth quarter. Well yeah, I know growing concerns about a possible recession to technically that's two straight quarters of economic contraction. So we'll see if we get to that point. Dana Peterson, chief economist at the conference board, a nonprofit research group. Dana. Thank you