US inflation is at its highest in 2.5 years. Stocks react with a drop

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Prices of goods and services in the United States rose 2.6 percent year-on-year in March. This is the highest annual inflation rate recorded by the US since July 2018. Month-on-month prices rose 0.6 percent, up 0.2 percentage points from February.

Fuel prices were mainly behind the acceleration in price increases in March, the US Bureau of Labor Statistics announced on Tuesday. Gasoline and diesel at U.S. gas stations increased by more than 22 percent year on year. It was the fuel that also contributed to the fact that energy commodities as a whole recorded price growth of 13.2 percent.

The Federal Reserve (US central bank) expected March annual inflation rate to reach just 2.4 percent. Even so, central bankers say that the current rise in inflation to 2.5-year highs is only temporary and that inflationary pressures will weaken in the coming months.

Wall Street responded to the news of March inflation with a slight decline. The Index S&P500 lost slightly more than half a percent in early trading, much like the Dow Jones Industrial Average. Later, however, Wall Street erased losses.


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