According to the Commerce Department, in March the price index for personal-consumption expenditures (PCE index), which is the Federal Reserve’s preferred inflation gauge, went up 2% from a year earlier in March, the first time in more than a year it was on target.
The current inflation is above 1.9%, which is the median of what Fed official put by the end of this year in a March meeting. According to Wall Street Journal, manufacturers from various sectors are signaling they are planning to raise the prices to offset rising cost on steel, oil and other inputs, and pressure from higher labor and transportation costs.
There are several factors pointing toward a sustained pickup in inflation in the months ahead. A weak dollar and trade tariffs could push up prices on imported goods. Moreover, low unemployment could put modest upward pressure on wages. Consumer spending also could pick up as households feel the impact of the $1.5 trillion tax-cut package signed into law in December.
In fact, the cost run-up has been faster than some firms expected. Appliance maker Whirlpool Corp. said earlier this month it began raising prices on washers and dryers in the U.S. as it expects to pay more for steel, resin and other raw materials this year. “U.S. steel is right now significantly elevated versus the rest of the world, and that’s just the reality,” Chief Executive Marc Bitzer told analysts in a call in April.