Inflation drops slightly to 8.3% but remains high close to four decades

US inflation has fallen slightly from a four-decade high reached in March

US inflation has fallen slightly from a four-decade high reached in March

Inflation dips slightly to 8.3% but remains high near four decades: Biden gains breathing space on hot button issue as energy prices moderate

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Inflation in the US has fallen slightly from a four-decade high it reached in March, signaling relief for consumers and giving President Joe Biden breathing room on the hot button issue.

The Labor Department said Wednesday that the consumer price index rose 0.3 percent in April from the previous month, up 8.3 percent from a year ago.

It breaks the string of seven consecutive monthly increases in annual inflation and instead marks a decline from March’s 41-year high of 8.5 percent.

Excluding volatile food and energy prices, so-called “core” inflation reached 6.3 percent in the 12 months ended April, down slightly from 6.5 percent in March.

US inflation has fallen slightly from a four-decade high reached in March

US inflation has fallen slightly from a four-decade high reached in March

US inflation has fallen slightly from a four-decade high reached in March

While still well above the Federal Reserve’s 2 percent target, April’s inflation reading marks a sign of easing from the previous month, and will likely be touted as progress by Biden.

Experts say inflation eased as energy prices rose at a more modest pace in April – though that effect could be short-lived after US gasoline prices hit new highs this week.

“April has also been a full year since prices started to rise dramatically, meaning it’s getting harder and harder to keep inflation as high as it was in March in 12 months,” said John Leer, chief economist at Morning Consult.

Inflation has become a major political threat to Biden and Congressional Democrats as the pivotal midterm elections in November draw closer. Small business owners are now saying in surveys that it is also their primary economic concern.

Biden tried to take the initiative on Tuesday, declaring inflation “the biggest problem facing families today” and “my top domestic priority.”

“I know you must be frustrated. I can taste it,” Biden told the country from the White House. “I think our policies have helped, not hurt.”

Biden tried to take the initiative on Tuesday, declaring inflation

Biden tried to take the initiative on Tuesday, declaring inflation

Biden tried to take the initiative on Tuesday, declaring inflation “the biggest problem facing families today” and “my top domestic priority.”

Biden blamed chronic supply chains linked to the rapid economic recovery from the pandemic, as well as Russia’s invasion of Ukraine, for fueling inflation.

He said his administration will help mitigate price hikes by reducing the government’s budget deficit and promoting competition in industries such as meat packaging, which are dominated by a few industry giants.

Earlier signs that US inflation could peak did not last. Price increases slowed last August and September, suggesting at the time that higher inflation could be temporary, as many economists — and Federal Reserve officials — had suggested.

But in October, prices rocketed again, prompting Fed Chair Jerome Powell to shift policy toward higher rates.

This time, however, several factors point to an inflation spike. Gas costs, which rose in March after the Russian invasion of Ukraine, fell on average in April and likely slowed inflation.

Used car prices are also expected to fall in the past month. The supply chains of automakers have been unraveled a bit and new car sales have soared.

Another factor will be how sharp price increases from a year ago affect new inflation calculations.

Prices of many goods rose last spring as the economy reopened and a surge in demand overwhelmed supply.

But this year, the monthly price increases for many goods are slowing down. As a result, inflation may decrease on an annual basis.

For example, furniture costs were up 1.8 percent in March 2021 and 2.1 percent the following month. But in March, furniture rose only 0.6 percent, potentially lowering year-on-year inflation.

Story in development, more to come.

Source: New feed