(The Center Square) – Illinois businesses are reeling from record high inflation.

The yearly inflation rate hit 8.5% in March – a four-decade high, according to the U.S. Department of Labor. Combined with the cascade of labor shortages, rising gas and rent, Illinois businesses are struggling.

“Inflation has been a shock to the system,” Clark Kaericher, senior vice president of government affairs at the Illinois Chamber of Commerce, told The Center Square. “That is the biggest increase since December of 1981.”

Gas prices are up 43%.

“The cost to transport goods needed for manufacture and to sell on store shelves got substantially more expensive,” forcing businesses to raise prices, he said.

We all see the increases at the gas pump, but prices have also jumped everywhere, Kaericher said. Anybody who is out buying things is feeling the impact of rising inflation.

“There is nothing that has gotten cheaper,” he said. “Everything has gotten more expensive, by varying degrees … but none of it by small degrees.”

The cost of a new car is up 12.6%.

“That is the biggest-ever increase in the (yearly) price of new cars in American history,” Kaericher said.

Another stunning price rise: the cost of rent. Rents in Illinois are up 5.1% this year, the largest yearly increase since 1991.

“The last time that rents increased at this rate, Marky Mark and Wilson Phillips had number one hits,” Kaericher said.

All businesses – whether small or large – are reeling from higher input costs, Kaericher said. At the same time, there is a labor shortage and labor costs are going up.

Wages are rising. Normally, that would be a cause for celebration, Kaericher said.

“Businesses want to give their employees 6 and 7% raises, and in a normal year that would be fantastic,” Kaericher said. “In this year, employees are still at a loss of 2 to 3% because of the price of living.”

Businesses are taking on tremendous costs to pay higher wages, and employees are still worse off, he said.

“Everybody loses,” Kaericher said.

Inputs are more expensive so businesses have to raise prices. Profits are static or they lose money.

“Everything has gotten substantially more expensive,” Kaericher said.

So what is the answer? The “brutal cure” of rising interest rates, Kaericher said. The Federal Reserve is gradually tightening the screws on spending with incremental hikes in interest rates. The question is: How high will interest rates go before inflation is under control?

“The last time we have successfully combated inflation at this rate was the very painful period of the Carter presidency,” Kaericher said. “We do not want to see the return of those days.”

The chamber is telling its members to “be conservative with their forecasting” and hope for the best.

“We are hoping that this is a one-year blip in the road,” Kaericher said. “But unless you have a working crystal ball, nobody knows that for sure.”