US inflation quickened in March to its highest levels since the early 1980s, as prices for food, fuel and housing shot up.

Data released by the Labour Department on Tuesday showed that the US Consumer Price Index, that tracks the prices that American consumers pay for everyday purchases, rose by 8.5 per cent in March from the same month last year, exceeding already elevated expectations of 8.4 per cent, from the 7.9 per cent reading in February. This increase on an annual basis was the largest since December 1981.

On a month-on-month basis, prices rose by 1.2 per cent in March, after climbing by 0.8 per cent in February. The so-called core inflation, that excludes volatile items such as food and energy, rose by 0.3 per cent month-on-month and by 6.5 per cent from a year earlier. Skyrocketing inflation will give further reason to the Federal Reserve to raise interest rates in the coming months.

In a separate report, the Labour Department announced that its Producer Price Index rose to an annual record high of 11.2 per cent in March, from 10.3 per cent in February.

Meanwhile, the unemployment rate in the UK continued to inch downwards in the three months to February, reaching its pre-pandemic level and returning to lows last seen in 2019, according to the Office for National Statistics. The jobless rate fell to 3.8 per cent in the three months to the end of February from four per cent in the previous three-month period.

The rate to end February came in line with expectations. On the other hand, job vacancies hit a record high at the start of the year, reaching nearly 1.3 million. The unemployment rate in the UK has not been lower than 3.8 per cent since 1974 but it may struggle to fall below this level as demand for labour is expected to slow down.

Finally, German economic confidence continued to weaken in April, but the decline was much slower than expected, survey results from the ZEW showed on Tuesday. The research institute said that its economic sentiment index fell to -41.0 points from -39.3 in March.

That is far higher than the consensus forecast of -48. Key elements of the report were also better than expected, with the Current Situation part of the index dropping to -30.8 from -21.4 in the same period, versus expectations of -35.

 This article has been prepared by Bank of Valletta plc for your general information only.