IInflation eased slightly to 8.3% for the 12 months ending in April, according to the consumer price index, the first decline in eight months, but still at a higher rate than economists expected.
Highly anticipated figures released by the Bureau of Labor Statistics on Tuesday revealed that inflation is still high despite interest rate hikes by the Federal Reserve and is near the worst since February 1982 during the Great Inflation that helped bring President Ronald Reagan to office.
MANUFACTURERS UNDER DOLLAR VALUE PRESSURE AS FOOD GRAPPLES WITH INFLATION
Soaring inflation has eaten away at President Joe Biden’s approval ratings as he and Democrats approach midterm elections. Consumer prices have risen rapidly since last August, especially for basics like food and gasoline. Typical weekly grocery bills, for example, have increased by more than $30.
Energy prices moderated in April but have climbed 30.3% over the past year, while food prices have jumped 9.4%, data showed on Wednesday.
Although headline inflation has eased, the details of Wednesday’s report hinted at underlying upward pressure on prices. The core CPI, which measures changes in the prices of goods and services excluding food and energy, rose 0.6% on the month, more than the 0.4% that economists had predicted.
“With the annual rate dropping from 8.5% to 8.3, it might be tempting to say we’ve seen the peak, but we’ve also been rigged before as was the case last August,” said Greg McBride , financial director. analyst at Bankrate. “The heart prizes that were cause for hope a month ago are cause for disappointment this month.”
The indices for housing, air fares, new vehicles, medical care and recreation all rose in April, while the indices for clothing, communications and used cars and trucks all trended lower in the month. latest.
Among the good news for the economy, used car prices, which were previously a major driver of inflation, fell for the third month in a row.
The Federal Reserve announced in March that it would raise its interest rate target by a quarter of a percentage point, the first rate hike since 2018, in a bid to rein in rising prices, although some economists and many Republicans say the central bank should have acted sooner to reverse its pandemic emergency measures.
This month, the Federal Open Market Committee announced that it would raise its interest rate target by half a percentage point. The central bank typically raises rates by only a quarter of a percentage point, which is therefore equivalent to two rate hikes at once and shows that the Fed is concerned about rising prices.
The central bank has also signaled that it may end up making further half-point hikes at its upcoming meetings in June and July, meaning that all signs point to interest rates continuing to rise. over the next year.
The war in Ukraine further adds to the inflationary flames. The conflict has sent energy prices skyrocketing as Russia is one of the world’s largest producers of oil and natural gas.
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The average price of gas in the United States hit a record high on Tuesday of $4.37 a gallon, according to AAA.
There are also fears that the Fed’s aggressive action to raise interest rates could push the economy into a recession, a prospect that also doesn’t bode well for Biden and the Democrats who ran the market. hard work and ultra-low unemployment.