Consumer prices jump 0.6% in March, biggest gain since 2012

FILE - In this March 25, 2021 file photo, shoppers look at items in Bed, Bath and Beyond, in New York. U.S. consumer prices increased a sharp 0.6% in March, the biggest increase since 2012, while inflation over the past year rose a sizable 2.6%. The big gains were expected to be a temporary blip and not a sign that long dormant inflation pressures were emerging. (AP Photo/Mark Lennihan, File)
FILE - In this March 25, 2021 file photo, shoppers look at items in Bed, Bath and Beyond, in New York. U.S. consumer prices increased a sharp 0.6% in March, the biggest increase since 2012, while inflation over the past year rose a sizable 2.6%. The big gains were expected to be a temporary blip and not a sign that long dormant inflation pressures were emerging. (AP Photo/Mark Lennihan, File) (Copyright 2021 The Associated Press. All rights reserved)

WASHINGTON – U.S. consumer prices increased a sharp 0.6% in March, the biggest uptick since 2012, while inflation over the past year jumped 2.6%. The big gains had been anticipated and are largely expected to be a temporary blip rather than a reawakening of long dormant inflation.

The increase in the Labor Department's consumer price index Tuesday followed a 0.4% increase in February and was the biggest one-month gain since a 0.6% bump in August 2012.

The year-over-year increase was far greater than the 1.7% increase for the 12-month change the previous month and while it easily exceeded the Federal Reserve's 2% target for inflation, the 2.6% increase in March was more of a snapshot of a period of time last year when prices tumbled as much of the world went into a pandemic lockdown.

The Fed a year ago slashed its key interest rate to near zero and has signaled that it does not plan to start increasing interest rates until it sees a sustained rise in inflation above its 2% target. Currently, the expectation is that the Fed's first rate hikes will not occur until after 2023.

To ward off turbulence in financial markets over fears of rising interest rates, Fed Chairman Jerome Powell has for weeks cautioned that inflation figures will rise this spring, but that the increase would be temporary.

Economists call the March jump a base effect due to those plunging prices at the start of the pandemic. The phenomenon can make inflation appear worse than it is at first glance.

For example, the 2.6% March jump looks out of whack compared with core inflation, which excludes volatile food and energy. That was up a more moderate 1.6% over the past 12 months, compared to a 1.3% 12-month increase in February.

For March, energy prices increased a sharp 5% led by a 9.1% jump in gasoline prices. The gasoline surge accounted for nearly half of the monthly price gain. AAA reports that the nationwide average for gasoline stands at $2.86 a gallon, up from $1.86 a year ago.