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The rate of inflation made its sharpest spike since 1981

DANIEL ESTRIN, HOST:

Ginger Brice of Austin, Texas, talking about what it's like trying to make ends meet in the middle of historic inflation. We're going to talk about the economics and politics of this with NPR's Scott Horsley and NPR's Kelsey Snell. Welcome to you both.

KELSEY SNELL, BYLINE: Hello.

SCOTT HORSLEY, BYLINE: Good to be with you.

ESTRIN: Scott, let's start with you. Prices jumped 1.2% just between February and March. What is going on?

HORSLEY: That's right, Daniel. Just when you think prices can't go much higher, they go higher. As you said, year-over-year inflation is the highest in more than four decades. The monthly increase in March was the highest in 17 years, and more than half that total jump in prices last month came at the gas pump. We know the price of gasoline hit an all-time high after Russia invaded Ukraine. And even though gas prices have come down a bit since then, the average price across the country is still well above $4 a gallon.

ESTRIN: But it's not just gasoline, right?

HORSLEY: No, it's not. Grocery prices have also been going up a lot. Some of that's also tied to the war in Ukraine. Both Russia and Ukraine are big wheat producers. And flour prices, for example, have been climbing around the world. But even before the war, food prices were on the way up. Over the last 12 months, grocery prices have jumped by 10%.

ESTRIN: Wow.

HORSLEY: And food economist David Ortega of Michigan State University says that's the biggest sticker shock at the supermarket in 40 years.

DAVID ORTEGA: We're headed into Easter weekend, right? So we're looking at - egg prices are up over 11%. You know, that Easter ham that many Americans will be cooking is up 14%. So it's very real for people here.

HORSLEY: Now, not everything is more expensive. The price of used cars actually dropped last month after soaring earlier because the shortage of new cars. But that drop in used car prices was more than offset by price increases elsewhere. Rent's been going up, as we heard Ginger Brice talk about. Airline tickets are getting more expensive. Inflation is spreading throughout the economy. I got my haircut this past weekend, and there was a sign in the barber shop warning that prices are going to go up $2 at the first of the month in order to keep pace with inflation. That's a 12.5% increase. Although after cutting my own hair early in the pandemic, I can tell you it's worth every penny.

(LAUGHTER)

ESTRIN: I'm sure you looked good, Scott. But let me turn to you, Kelsey. The White House keeps using this term - Putin's price hiked. So the White House very deliberately trying to blame Russia for inflation, at least for gas prices. Is that strategy working?

SNELL: Well, I'll pointed to an NPR/Ipsos poll conducted last month that showed that roughly a third of all respondents and two-thirds of Republicans blame Biden specifically for inflation. You know, only about 20% of all Americans in that poll say they blame Putin for gas and oil prices. It's even just a quarter of Democrats who blame Putin. You know, more so, they blame big oil and gas companies. But, you know, as Scott's been saying, gas and oil are just one part of inflation. And people are really worried about things like the cost of groceries, as we heard. People worry about housing. People worry about new cars. Just about everything right now is more expensive, and people do realize that those price concerns predated the war. So my colleague Asma Khalid asked White House Press Secretary Jen Psaki about this yesterday, and here's how she responded.

(SOUNDBITE OF ARCHIVED RECORDING)

JEN PSAKI: Factually, if you look at the data, the average gas prices are up a dollar - $0.80 to a dollar. It's about 25%. We've seen increasing gas prices since the start of this invasion. And we know energy prices is a big driver of the inflation data.

SNELL: So Psaki says the White House has been talking about inflation for a long time, but they say Russia will be the thing driving this going forward - the big thing driving it going forward.

ESTRIN: OK. So, Scott, where does inflation go from here?

HORSLEY: Forecasters think March was probably the peak for annual inflation, unless another war breaks out some place. Gas prices have started coming down. We're also coming into a stretch where last year's prices were higher. So the year-over-year comparisons are going to look a little bit better. But even if inflation cools off a bit, prices could stay uncomfortably high. The Federal Reserve has started raising interest rates, and over time, that should help to bring demand back in line with supply. But, you know, there's a long lead time before those rate hikes start to work, so we're likely to be living with higher inflation than most of us are used to for some time to come.

ESTRIN: And, Kelsey, there are politics to this, too, right? Are Democrats worried that inflation could hurt their chances of keeping control of Congress in the midterm elections?

SNELL: Oh, absolutely. And they have every reason to be worried. You know, most political strategists will tell you that most people vote based on how they personally feel and the world they personally experience. If people feel like they are being economically harmed, and they see that those conditions have gotten worse under Democrats, well, many of them will blame the party in power. You know, Biden is aware of that. That's why he went to Iowa today to talk about gas prices. He's going to North Carolina on Thursday to talk about supply chain problems. That said, there are a lot of things that can happen between now and Election Day. And while it's unlikely inflation will suddenly get resolved, that doesn't mean major events won't happen that could alter top political priorities for a lot of voters.

ESTRIN: That is NPR congressional correspondent Kelsey Snell and chief economic correspondent Scott Horsley. Thank you both.

HORSLEY: You're welcome.

SNELL: Thanks for having us. Transcript provided by NPR, Copyright NPR.