US inflation dipped marginally to 8.3% in April, but stayed close to March’s 40-year high of 8.5%, underscoring the urgency of the Federal Reserve’s push to stamp out inflation.
This was disclosed by the US Bureau of Labor Statistics in Consumer Price Index Summary released today.
Despite the fact that the consumer price index declined for the first time in eight months; a step down from the 8.5% gain in March, it was somewhat higher than FT economists’ predictions of an 8.1% rise.
What the report is saying
The report said “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in April on a seasonally adjusted basis after rising 1.2 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.”
The report added that “Increases in the indexes for shelter, food, airline fares, and new vehicles were the largest contributors to the seasonally adjusted all items increase. The food index rose 0.9 percent over the month as the food at home index rose 1.0 percent. The energy index declined in April after rising in recent months.“
What you should know
Over the last year, the energy index has increased by 30.3%. Over the course of the year, all of the major energy component indexes rose. The gasoline index went up 43.6%, while the fuel oil index went up 80.5%. Over the last year, the electricity index jumped by 11.0%, and the natural gas index increased by 22.7%.
Americans would have to pay more when they eat out as the index for eating out increased by 7.2%. The index for full-service meals increased 8.7% in the last year, the greatest 12-month increase since the index’s establishment in 1997.
Following a 0.3% gain in March, the index for all items excluding food and energy increased by 0.6% in April. Medical care, recreation, and household furnishings and operations all grew in April, along with indexes for lodging, airline prices, and new automobiles.
The clothes, communication, and used cars and trucks indices all fell this month.
Price pressures are no longer phenomena limited to industries most affected by pandemic-related disruptions but are instead a broad-based trend affecting all sectors, according to the latest rise.
Hence, the Federal Reserve has stepped up its attempts to keep pricing pressures in check, raising interest rates for the first time in more than two decades this month. The federal funds rate is likely to rise to 2.7 percent by the end of the year, with more rises expected in June and July, and possibly even September.
In June, the Fed will begin reducing its $9 trillion balance sheet, the second of two tools it is employing to cool the rising inflation per cent in March.
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