Consumer Prices Jump In March

The prices consumers pay rose 0.5 percent in March, the same as the increase in February, according to the monthly report from the U.S. Labor Department. That's an annual inflation rate of 6.0 percent.

The so-called "core" inflation rate, which excludes food and energy costs, was relatively tame last month, rising just 0.1 percent. Unfortunately for consumers, they can't exclude food and energy costs from their budgets.

As consumers are well aware, gasoline prices are at their highest levels since 2008, with the average price for gas over $4 a gallon in Alaska, California, Connecticut, Hawaii and Illinois.

Food costs more

Food prices are also racing higher, as producers are beginning to pass on their higher costs of commodities. At the producer level, inflationary pressures appear to be building even faster.

Thursday's Producer Price Index report showed inflation at the wholesale level in March was 0.7 percent, with a "core" rate of 0.3 percent. A number of consumer products increased in price at the wholesale level, including a big jump in car and truck prices.

"If you are looking for reasons to believe that inflation will become a problem, all you have to do is analyze the wholesale cost numbers," said economist Joel Naroff, of Naroff Economic Advisors, in Holland, Pa. "The Producer Price Index soared in March and unfortunately that is becoming a broken record."

Could it be worse?

But is inflation already worse than the government says? A report by ShadowStats.com, an organization warning of "hyper-inflation," says the inflation rate is actually 9.6 percent, if you calculate it the way the Bureau of Labor Statistics did before 1980.

Since that time, the Consumer Price Index now accounts for the substitution of products (consumers opting to buy a cheaper alternative to what they normally buy) and the improvement in products costing the same price. For example, an iPad 2 is an improvement on the iPad, but costs the same.

In an article, Business Insider calls ShadowStats' reasoning "pretty bizarre,” noting that improvements in quality should be a factor in gauging inflation. Perhaps so, but there doesn't seem to be a corresponding formula for measuring the worsening of quality in some consumer products.

If consumers pay the same but get a product nowhere near as good as what they could have purchased in past, isn't that inflationary too?