The Personal Consumption Expenditures (PCE) price index, which is the primary inflation gauge used by the Federal Reserve, increased 5.4 percent from a year ago, the largest increase since April 1983, excluding volatile food and energy prices.
The PCE index, when including gas and groceries prices, jumped 6.4 percent, the fastest pace since January 1982.
On a monthly basis, the core PCE increase was up 0.4 percent, in line with estimates.
Federal Reserve officials consider the latest PCE report, released by the Commerce Department on March 31, to be the most reliable inflation indicator.
High consumer demand combined with major goods shortages have fueled the sharpest price increases in four decades.
Inflation measurements are expected to worsen in the coming months, as the latest report does not factor in the disruption to global supplies caused by Russia’s invasion of Ukraine, which began on Feb. 24.
The conflict has hit global oil markets and caused skyrocketing prices for wheat, nickel, and other key commodities.
Energy prices jumped 3.7 percent for the month, before stabilizing in March, the largest increase since October, while food inflation rose 1.4 percent, the most in two years.
The cost of a gallon of gas shot up to a national average of $4.24 a gallon March 30, according to AAA, up 63 cents from a month ago, when it was $3.61.
Meanwhile, services inflation rose slightly at just 0.3 percent.
American consumers increased their spending by a mere 0.2 percent in February, below the 0.5 percent estimate, and down from 2.7 percent in January, most likely due to inflation pressures.
If adjusted for inflation, actual spending in February fell by 0.4 percent.
There has been a consumer shift away from heavy spending on goods toward expenditures on services, such as travel and entertainment, which has seen a revival since the pandemic.
Spending on travel and entertainment grew 0.6 percent, the biggest increase since last summer, while purchases of autos, furniture, clothes, and other goods dropped 2.1 percent.
There was also a noted transition from longer-lasting goods to shorter-term purchases, as inflation for durables flattened, while nondurable prices rose 1.8 percent.
Although some economists had predicted that a decline in goods purchases would cool inflation, goods still saw a price increase, with a 1.1 percent jump in February, the fastest increase since October 2021.
The price pressures are due to the continuing supply chain backlogs that have been a problem for the economy since the pandemic.
Americans’ overall disposable income was up by 0.5 percent in February, the highest gain since November, just up from 0.1 percent in January, but real disposable income fell 0.2 percent.
Wages and salaries are up by 0.8 percent, the most in four months, with personal savings rising to $1.15 trillion, or at a rate of 6.3 percent.
As the employment picture has improved and wages have gone up, inflation is the biggest issue as price increases have accelerated.
The Federal Reserve began increasing interest rates with a tightened policy in March to fight rapidly surging inflation, with six more hikes expected this year.
This came after the Fed terminated its loosest monetary policy in history, when it lowered rates to alleviate the economy during the pandemic.
Fed officials project that inflation will rise to 4.3 percent by the end of the year.
On March 31, the Labor Department released a separate report that showed total initial jobless claims at 202,000 for the week ending March 26.
This was an increase of 14,000 from the previous week and ahead of the 195,000 estimate, but still below pre-pandemic levels.
Continuing claims dropped to just over 1.3 million, the lowest level since Dec. 27, 1969.
Associated Press contributed to this report.