If the 7.9 percent inflation seen in February felt like a gut punch, be prepared for even more pain when the latest consumer price index (CPI) data is released later this week. Per the Financial Times, March’s inflation rate of 8.4 percent year-over-year is projected to have hit another four-decade.

“The risk is that this keeps the Fed needing to surprise the market on the hawkish side just to catch up to inflation risks,” Jim Caron, a portfolio manager at Morgan Stanley, told the Financial Times.

Inflation Has Peaked?

However, as reported by U.S. News & World Report, there are potential signs that inflation might have peaked in March, which could influence the Federal Reserve’s decision on how large of an interest rate hike it will settle on in May and in future months.

“We recently released our updated forecast and believe CPI will peak in March … as higher year-ago base effects take hold and the pace of overall economic growth slows which should lead to price growth easing on a sequential basis this summer,” Sam Bullard, a managing director and senior economist at Wells Fargo, wrote over the weekend.

“That said, we fully acknowledge the upside risks to the inflation outlook, taking into account the fallout of the Ukraine-Russia conflict on energy, food, and other important commodities,” Bullard continued.

Late last week, St. Louis Federal Reserve Bank President James Bullard stated that the Fed still needs to raise interest rates substantially to control inflationary pressures. He contended that a rules-based approach suggests that the central bank needs to hike its benchmark short-term borrowing rate to approximately 3.5 percent.

“I do think we have to move forthrightly in order to get the policy rate up to the right level to deal with inflation that we’ve got in front of us,” Bullard told reporters.

“We want to do that in a way that doesn’t cause too much disruption, but on the other hand, we do have a serious inflation issue and we have to move forthrightly to get inflation under control,” he added.

Focus on Energy, Food

In recent weeks, many of the inflation-related headlines have been centered around fast-rising energy and food prices.

In the aftermath of Russia’s invasion of Ukraine six weeks ago, average gas prices across the nation are still elevated, hovering between $4.10 and $4.20, according to AAA data. Those prices, however, could potentially decrease in the coming weeks.

“Gas prices have continued to move in the right direction—down—saving Americans approximately $100 million every day compared to when prices peaked about a month ago,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement.

“And, more good news is on the horizon: the national average this week will likely fall back under the critical $4 per gallon mark,” he continued.

As for soaring food prices, Americans received more bad news recently when the U.S. Department of Agriculture released a worrisome update to its Food Price Outlook for 2022. The Department of Agriculture reports that “all food prices are now predicted to increase between 4.5 and 5.5 percent.” That’s on top of a nearly 8 percent rise seen over the past year.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.