economic inflation On an annual basis for the first time in months in April, it rose more than expected with supply chain restrictions, the Russian war in Ukraine and strong consumer demand that continued to keep consumer prices near their highest level in 40 years.
The Labor Department said Wednesday that the Consumer Price Index, a broad measure of the prices of everyday goods including gasoline, groceries and rents, rose 8.3% in April from a year ago, down from the 8.5% year-on-year recorded in March. . Prices jumped 0.3% in the one-month period in March.
Those numbers were above the headline 8.1% and the 0.2% monthly gain that economists at Refinitiv had expected.
So-called core prices, which exclude the most volatile measures of food and energy, rose 6.2% in April from a year earlier, also more than Refinitiv had forecast. Core prices also rose 0.6% month over month – double the 0.3% increase in March, indicating that core inflation pressures remain strong.
“This is another bullish inflation surprise and suggests the slowdown will be very slow,” said Seema Shah, chief strategist at Principle Global Investors. “Focus will soon begin to shift from where inflation has peaked to a plateau, and we fear it will reach an uncomfortably high level for the Federal Reserve.”
Rising inflation is erasing the strong wage gains American workers have seen in recent months: Average real hourly earnings fell 0.1% in March from the previous month, as rising inflation eroded total wage gains by 0.3%, according to the Labor Department. . On an annual basis, real earnings fell 2.6% in April.
The rising inflation was bad news for Biden, who has seen his popularity rating decline as consumer prices rise. Biden on Tuesday again blamed price hikes on supply chain bottlenecks and others pandemic– Disruptions caused by the economy, as well as the Russian war in Ukraine. Most economists now agree that unprecedented levels of government stimulus, and a stronger-than-expected recovery from the pandemic, have also played at least some role in exacerbating price hikes.
The report is likely to provide little comfort to the Federal Reserve, which faces the difficult task of lowering demand and prices without inadvertently dragging the economy into recession. Policy makers raised the benchmark interest rate by 50 basis points last week for the first time in two decades and indicated that more rate increases of similar size are on the table in upcoming meetings as they scramble to catch up with inflation.
“Inflation is very high, we understand the difficulties it is causing and we are moving quickly to bring it down,” Chairman Jerome Powell told reporters last week. “Assuming economic and financial conditions develop in line with expectations, there is a broad feeling in the committee that an additional 50 basis points increase should be on the table in the next two meetings.”
This is an evolving story. . Please check back for updates