Digital Zeitgeist – US Inflation in April Exceeded Expectations Although it Was Still High at 4.9%
Since reaching a 40-year high in June of last year, the annual pace has declined substantially, but prices are still growing at a rate that is over twice higher than the Fed’s objective.
According to a study released on Wednesday by the labour department, the cost of goods and services in the US increased by 4.9% in April compared to the same month last year.
Since reaching a 40-year high of 9.1% in June of last year, the annual rate of inflation has significantly decreased. The increase in April was almost equal to the 5% increase seen in March. Although prices continue to rise at a rate that is more than twice the Federal Reserve’s goal rate of 2% annually, it was the rate’s tenth consecutive month of falling.
According to the most recent consumer price index (CPI), a frequently used indicator of how much products and services cost in the US economy, prices increased by 0.4% over the course of the month, up from a 0.1% increase in March.
Following rises in the index for used vehicles and trucks and the index for petrol, housing expenses were the main driver of the monthly increase. After excluding the unpredictable costs of energy and food, prices increased 0.4% in April, just like they did in March.
The US has far lower inflation than other nations. Inflation in the UK in March, the most recent month for which data is available, was 10.1% whereas it was 6.9% in the Eurozone.
Despite the decreasing trend, the Fed has kept up its aggressive rate hikes in an effort to rein in price increases. It issued its tenth-rate rise last Monday, dating back to March 2022. Jerome Powell, the head of the Fed, said that the institution may halt rate hikes while it evaluates their effects. But he has made it obvious that rates would probably stay high as long as inflation is strong.
John Williams, the president of the New York Fed, issued a warning on Tuesday, saying that despite the efforts taken by the central bank, he expects inflation to be an ongoing issue for some time.
“Because of the lag between policy actions and their effects, it will take time for the [Fed’s] actions to restore balance to the economy and return inflation to our 2% target,” he told the Economic Club of New York.
online sources: theguardian.com, federalreserve.gov, us.dol.gov