Inflation in the Twin Cities subway hit another record high last month as fuel and food prices continued to rise.
The consumer price index for the region with 16 counties jumped 8.2% in the past year, according to federal data released Tuesday. It is just below the national inflation rate of 8.5%, which was reported the same day by the Bureau of Labor Statistics.
Prices are expected to continue to rise on a number of goods this year, but some economists believe that inflation is expected to fall in the coming months as year-on-year comparisons become less dramatic.
The Bureau of Labor Statistics has tracked Minneapolis-St. Paul Metro area prices on every other month since 2017, and the inflation rate in March was the highest recorded in the short period. National inflation is at its highest level in more than 40 years.
After stock rises early in the morning, investor optimism faltered on the new federal data as markets closed on Tuesday.
The cost of producing food has risen due to increased transport, labor and raw material costs – and that inflation is being passed on to consumers.
“It’s very difficult for households that are coping with tight budget constraints and have very little flexibility,” Lael Brainard, a member of the Federal Reserve Board of Governors, said at a Minneapolis Fed event last week. “For low-income families, with more than three-quarters of their income taken from necessities, when the price of those necessities rises, there is really very little they can do to replace or mitigate.”
For food prices, shoppers in Minnesota experienced another month of significant price increases, though less severe than the country as a whole. Year-on-year, grocery prices rose 10.3% nationwide and 7.3% around the twin cities in March.
However, prices for certain consumer goods – such as cereals, baked goods and alcohol – rose faster here than the national average.
“These inflationary challenges run all the way through the supply chain and get through to the grocery store,” said Jamie Pfuhl, president of the Minnesota Grocers Association. “We are very sensitive to what happens to our customer basket and we try to find a more direct supply chain when there is availability.”
Pfuhl said shoppers should check their pantry, stick to a list and look for deals in stores to keep grocery bills in check.
“It’s also important to make sure you’re still supporting your local grocery store – you want them to stay viable too,” she said.
Prices for regional restaurants also rose 8.8% last month, more than the national increase of 7.1%.
The war in Ukraine is expected to continue to put pressure on food prices this year. Both countries are major grain exporters, but the violent attacks on Ukraine and economic sanctions against Russia have contributed to bottlenecks and insecurity in global trade.
The rising cost of natural gas, an important fertilizer ingredient, is also driving up food prices.
Higher energy prices are a leading cause of cross-category inflation, and a number of factors have contributed to the persistent brand shock at the pump. Here, too, Russia’s invasion of Ukraine has rattled global markets, which has sent oil prices soaring last month.
The renewed demand for fuel, as pandemic restrictions disappear, also exceeds supply.
Gas prices rose 40% year-on-year in the twin towns in March compared to an increase of almost 50% nationwide.
According to GasBuddy, gas prices in Minnesota hit their highest average of the year on March 11 at $ 3.96 per gallon. gallon. Prices have fallen since then and averaged $ 3.83 per gallon on Tuesday.
The US Energy Information Administration expects gas prices to fall gradually this summer, but remain at their highest national average since 2014.
“Uncertainty over energy supply is the result of the conflict in Ukraine, OPEC +’s production decisions and the rate at which US oil and natural gas producers are increasing drilling,” the agency said in its short-term energy outlook released on Tuesday. “We estimate that the average U.S. household will spend about $ 2,945 on gasoline by 2022, which in real terms is $ 455 (18%) more than in 2021.”
Domestic crude oil production will approach pre-pandemic levels this year and could reach a record 13 million barrels a day by 2023, the agency said, potentially bringing gas prices down.
The next set of data from the Twin Cities area will be released in June.