A small drop in annual inflation is the first slowdown after seven consecutive months of deteriorating price growth.
Washington – Inflation slowed in April after that seven months of tireless achievementan indicative indication that price increases could peak, still creating a financial burden on American households.
Consumer prices jumped 8.3% last month from 12 months earlier, This was announced on Wednesday by the Ministry of Labor.
This was below the 8.5% increase over the same period last year in March, which was the highest since 1981. Monthly prices rose 0.3% from March to April, which is still high, but the smallest increase in eight months.
However, Wednesday’s report contained some warning signs that inflation could pick up. Excluding volatile food and energy categories, so-called core prices jumped 0.6% from March to April – twice as much as 0.3% from February to March. This increase was due to rising prices for airline tickets, hotel rooms and new cars. Rental prices have also risen sharply.
Last year, food prices rose by 10.8%, the largest increase over the same period last year since 1980. The price of a gallon of gas in April fell by 6.1%, but still rose by almost 44% compared to last year.
And so far in May, gas pump prices have jumped again. Nationwide, the average per gallon of gas is a record $ 4.40, according to AAAalthough this figure is not adjusted for inflation. The main factor is the high cost of oil. A barrel of U.S. reference crude on Tuesday sold for about $ 100 a barrel. In April, gas fell to about $ 4.10 a gallon after reaching $ 4.32 in March.
In addition to financial tensions for households, inflation poses a serious political problem for President Joe Biden and Democrats in Congress during the midterm elections, and Republicans say Biden’s $ 1.9 trillion financial support package last March overheating the economy filling it with checks on incentives, increased unemployment benefits and tax payments on children.
On Tuesday, Biden tried to take the initiative and declared inflation “the number one problem facing families today” and “my top domestic priority.”
Biden blamed chronic fuel disruptions in supply chains linked to the rapid economic recovery after the pandemic, as well as Russia’s invasion of Ukraine. He said his administration would help ease price increases by reducing the state budget deficit and encouraging competition in areas such as meat processing, which is dominated by several giants.
However, new failures abroad or other unforeseen problems can always bring inflation back to new highs in the US. If the European Union decides, for example, to cut off Russian oil, gas prices in the United States are likely to accelerate. Blocking COVID in China exacerbates supply problems and harms the growth of the world’s second-largest economy.
Previous signs that inflation in the US may peak are not continuing. Price growth slowed in August and September last year, suggesting that the rise in inflation may be temporary, as many economists – and officials of the Federal Reserve – believe. But in October, prices rose again, forcing Fed Chairman Jerome Powell to start changing policies toward higher rates.
This time, however, several factors point to a peak in inflation. Natural gas prices, which rose in March after Russia’s invasion of Ukraine, fell on average in April. The supply chains of automakers have become a bit more complicated, sales of new cars have increased.
Although food and energy have experienced the most severe price spikes in the past year, analysts often track the key figure to get an idea of core inflation. Core inflation also tends to grow more slowly than overall price growth, and may take longer to decline. Rents, for example, are growing at a historically rapid rate, and there are few signs that this trend will change any time soon.
The unexpected persistence of high inflation has forced the Fed to embark on what could become it the fastest series of interest rate increases at 33 years old. Last week, the Fed raised its base short-term rate on Fr. half, the sharpest growth in two decades. And Powell has signaled that such drastic rate hikes will be even greater.
Powell’s Fed is committed to fulfilling the certainly difficult – and risky – task of cooling the economy enough to slow inflation without causing a recession. Economists say such an outcome is possible, but unlikely with such high inflation.
Meanwhile, by some measures Americans’ wages are growing at the fastest pace in 20 years. Their higher pay allows more people to at least partially keep up with higher prices. But employers typically respond by charging customers more to cover their high labor costs, which in turn increases inflationary pressures.
The report on jobs for April last Friday included data on hourly wages suggested that wage growth is slowingwhich, if continued, could help ease inflation this year.