A monthly Gallup poll released on Tuesday showed 17% of respondents in March listed inflation and the high cost of living as the most important problem facing the country today. That number is a 7-percentage-point increase from last month and far more than the 8% of respondents who said the same in January. Inflation now polls as the top economic problem and the second problem overall, slightly behind “the government/poor leadership.”
“Inflation began rising as a public concern last fall, after being a nonissue for Americans throughout 2020. It registered no more than 2% of mentions in 2021 until October, when 5% cited it,” the author of the survey noted.
Consumer prices increased 7.9% in the 12 months ending in February, the fastest pace since 1982 when the country was last mired in too-high inflation.
Dissatisfaction with inflation has badly hurt President Joe Biden’s approval ratings and undercut support for his plans to enact major new spending programs.
Because of the higher inflation, the Federal Reserve is set to raise its interest rate target throughout the year in an effort to slow spending.
Federal Chairman Jerome Powell signaled last week he was open to hiking rates by a half percentage point at upcoming Fed meetings, a departure from the traditional quarter-percentage-point increases, and markets are now pricing in that larger hike after the Federal Open Market Committee’s May meeting.
The likelihood of the more aggressive rate hike occurring is pegged at more than 71%, according to CME Group’s FedWatch tool, which calculates the probability using Fed fund futures contract prices.
At its last meeting, the central bank announced it would raise its interest rate target by a quarter of a percentage point, the first such move since 2018. The unprecedented easy money policies the Fed implemented after the pandemic began has further allowed prices to creep up.
During much of last year, Powell and other Fed and Treasury Department officials insisted inflation was merely transitory and that it would settle back down near the central bank’s 2% target. Other economists had been warning the excess spending during President Joe Biden’s first year in office coupled with supply-side issues would be jet fuel for higher prices.
While inflation has been broad and affecting nearly all goods, energy prices have exploded far beyond the 7.9% headline rate. Four percent of respondents cited oil and gas prices as one of the main problems facing the country in March, up from 1% in February.
Russia’s ongoing war in Ukraine has driven up energy prices even further but has also drawn international concern about potential escalation. Just under 1 in 10 of those surveyed cited the Russian invasion as the most important issue facing the country.
While anxiety about inflation was the second most-cited issue in the survey, concerns about the government and poor leadership more generally took the cake for the most important issue facing the country, with 22% saying as such.
Other notable changes of the past month include a dramatic decrease in those citing the COVID-19 pandemic as a concern. In January, 20% mentioned the coronavirus, but that number fell to 13% in February and is now just a primary concern for 3% of the poll’s respondents.