The US Federal Reserve (Fed) has warned that it is on the verge of a 4% inflation rate, with headline PCE and CPI inflation rates exceeding the Fed's 2% target for five consecutive years. The annual change in the PCE price index hit 3.5% in March, the highest in nearly three years, according to figures from the Federal Reserve. Core PCE inflation rose more slowly to 3.2%, but the longer energy prices remain elevated, it is more likely to bleed into core inflation. The Cleveland Fed's real-time inflation Nowcasting model projects that annual core PCE is currently running at 3.7% and headline CPI at an eye-popping 6.1%. The average price of gasoline at the pump is up nearly 50% since the start of the war, the biggest increase in at least 30 years.