Consumer prices rose 8.5 percent last month from a year earlier, slightly above Wall Street expectations, the Bureau of Labor Statistics said on Tuesday. The monthly gain was 1.2 percent, the fastest jump since September 2005 and a sharp acceleration from the 0.8 percent increase recorded in February. However, once volatile items such as food and energy were removed, the CPI “core” rose just 0.3 percent in March. This was the slowest rise since September, triggering a rally in overnight bond and finance markets as traders bet the Federal Reserve would not need to tighten policies to curb inflation as aggressively as markets expected. For the first time, the data included the economic impact of Russia’s invasion of Ukraine, which has clouded global prospects and sparked concerns about a slowdown in growth coupled with even higher price pressures. Russia is one of the largest exporters of energy in the world and both Russia and Ukraine are major suppliers of wheat and other grains. The Biden government on Monday blamed rising prices for the war, with White House spokeswoman Jen Psaki saying the CPI’s rating would be “extremely high due to Putin’s rising prices.” The figures highlighted the impact of volatile commodity prices, with the jump in gasoline accounting for more than half of the total CPI increase in March. Over the past year, pump prices have risen by 48%, including an 18.3% increase between March and February. But there were signs that prices were slowing elsewhere. Used car prices, which have skyrocketed since the pandemic drove many Americans off public transport, fell 3.8 percent in March. The cost of buying a new vehicle increased by 0.2 percent compared to a month ago, an increase lower than the profit recorded in February. The slower rise in non-energy and food prices comes as inflation expectations have risen. A new monthly survey released by the Fed branch in New York on Monday showed that US households are preparing to continue raising costs. Next year, consumers expect inflation to reach 6.6. percent, recording an increase of 0.6 percentage points compared to the previous period. Expectations for the three-year outlook have fallen sharply, but remain high at 3.7%. Concerns that inflation will deepen further in the world’s largest economy have prompted the US Federal Reserve in recent weeks to take a more aggressive approach to tightening monetary policy.

The Fed is now poised to raise interest rates by half a percentage point at its next policy meeting in May, double the rate hike in March, as it seeks to raise its key interest rate to a more “neutral” level that none of the the two does not help. nor does it restrict growth until the end of the year. Officials predict that this interest rate will be around 2.4 percent, indicating at least one more adjustment by half a unit, in addition to the four additional quarterly interest rate increases in 2022. The central bank is also set to start shrinking its $ 9 trillion balance sheet next month, raising it to $ 95 billion a month in about three months starting in May. Traders on Tuesday lowered their expectations for how high the Fed will raise interest rates this year to 2.43%, from 2.59% earlier in the day. US financial markets rose after the data, with futures indicating a 1.2% rise in the S&P 500 stock index at the opening. US bonds also recorded gains, with the yield on the 10-year bond falling 0.06 percentage points to 2.72%. Yields decrease when the price of a bond increases.