U.S. Prices Went Down Last Month
Consumer inflation in the United States showed signs of cooling last month, offering a tentative relief for officials at the Federal Reserve and President Joe Biden’s re-election team.
According to the Labor Department, prices rose 0.3% from March to April, slightly down from 0.4% the previous month. Year-over-year inflation decreased from 3.5% to 3.4%, with underlying inflation reaching its lowest level in three years.
The unexpected high inflation experienced in the first three months of the year had dimmed hopes of taming the worst bout of inflation in four decades. Fed Chair Jerome Powell responded by emphasizing the need for “greater confidence” that inflation is falling towards the 2% target level before considering reducing borrowing rates from their currently high levels.
Excluding volatile food and energy costs, core prices rose 0.3% from March to April, marking a decrease from three consecutive months with 0.4% increases. Core prices also showed a 3.6% increase in April compared to the previous year, down from 3.8% in March. Core prices are closely monitored by the Fed as they provide insights into the direction of inflation.
While apartment rental prices remained high, climbing 0.4% from March to April, average apartment rents were 5.4% higher than the previous year. Rental and housing costs accounted for two-thirds of the year-over-year increase in core prices.
The trajectory of inflation could have a significant impact on the presidential race, with critics of Biden attempting to attribute high prices to the president to undermine his re-election bid. Despite robust hiring and healthy wage growth, prices continue to remain well above pre-pandemic levels.
Powell reiterated his expectation that inflation will eventually reach the Fed’s 2% target, although his confidence in this forecast has weakened following three continuous months of elevated price readings. The Fed has raised its key interest rate to a 23-year high of 5.3% to combat rising prices and plans to maintain this rate until inflation is fully under control.
Economists are divided on whether recent high inflation figures signify a re-acceleration in price growth or are merely echoes of pandemic-related price distortions. Factors such as soaring auto insurance costs and elevated apartment rents contribute to persistent inflation.
Powell also acknowledged rising rents as a key factor keeping inflation high, citing the discrepancy between new apartment lease data and government measures that encompass all rents, including renewals facing significant increases. He recognized that the economy is different this time due to the large number of Americans and businesses refinancing mortgages at low rates before the Fed’s rate hikes.
Our journalists at Boston Post News are committed to providing comprehensive coverage of this historic presidential election. Your support enables us to deliver investigative reports, well-researched analysis, and timely updates that you won’t find elsewhere.
As we navigate the complexities of this political climate, your contributions play a vital role in sustaining independent journalism. Would you consider making a donation to help fund our news during this critical period? Your loyalty and support are instrumental in upholding a free press.
Join us as we continue to follow the twists and turns of this crucial election. Together, we can uphold the future of democracy and ensure that informed journalism thrives. Thank you for being a part of our mission to deliver accurate and essential news coverage.
