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April 2022 US inflation rate report: Consumer prices jump 8.3% over past year but slowed from previous month’s 4-decade high

WASHINGTON – Inflation slowed in April after seven months of relentless gains, a sign that price hikes are likely to peak while continuing to put financial pressure on US households.

Consumer prices rose 8.3% last month from 12 months earlier, the Labor Ministry announced on Wednesday. This was lower than the 8.5% year-on-year increase in March, the highest since 1981.

On a monthly basis, prices rose 0.3% from March to April, another high but the smallest increase in the last eight months. Consumer prices had risen 1.2 percent from February to March, largely due to a sharp rise in gas prices triggered by Russia’s invasion of Ukraine.

MORE: Gas prices are jumping to new highs

Nationwide, the price of a gallon of natural gas reached a record $ 4.40. according to the AAA, although this number is not adjusted for inflation. The high price of oil is the main factor. A barrel of U.S. crude oil traded for about $ 100 a barrel on Tuesday. Gas had fallen to about $ 4.10 a gallon in April, after hitting $ 4.32 in March.

Aside from financial pressures on households, inflation is a serious political problem for President Joe Biden and congressional Democrats in the midterm, with Republicans arguing that Biden’s $ 1.9 trillion bailout package March overheating of the economy flooded the economy with stimulus checks boosting unemployment and child tax credit payments.

On Tuesday, Biden tried to take the initiative and declared inflation “the No. 1 problem families face today” and “my top domestic priority”.

SEE ALSO: Biden defends inflation and gas prices as he tries to focus on the GOP

Biden blamed the supply chain’s chronic cries of rapid economic recovery from the pandemic and Russia’s invasion of Ukraine to ignite inflation. He said his government would help ease price increases by shrinking the government’s budget deficit and boosting competition in industries such as meat packaging, which are dominated by a few industry giants.

However, new upheavals abroad or other unforeseen problems could always bring US inflation back to new highs. If the European Union decides, for example, to cut off Russian oil, gas prices in the United States are likely to accelerate. China’s COVID lockdowns are exacerbating supply problems and hurting growth in the world’s second-largest economy.

SEE ALSO: How did the Great Resignation disrupt the future of work?

The previous signs that inflation in the US may be peaking did not last. Rising prices slowed last August and September, suggesting at the time that higher inflation may be temporary, as many economists – and Federal Reserve officials – have suggested. But prices soared again in October, prompting Fed Chairman Jerome Powell to begin shifting policy toward higher interest rates.

This time, however, several factors suggest a peak in inflation. Gas prices, which soared in March after Russia’s invasion of Ukraine, fell on average in April and are likely to slow inflation. Used car prices are also expected to fall last month. Automotive supply chains have disintegrated a bit and new car sales have increased.

While food and energy have suffered some of last year’s worst price increases, analysts often watch the key figure to gain a sense of underlying inflation. Core inflation usually also rises more slowly than aggregate price increases and may take longer to decline. Rents, for example, are rising at a historically rapid rate and there is no indication that this trend will be reversed any time soon.

MORE: US adds 428 thousand jobs in April despite rising inflation and interest rates

The sudden persistence of high inflation has prompted the Fed to launch what could be the fastest growing interest rate line in 33 years. Last week, the Fed raised its key short-term interest rate by half a point, its sharpest rise in two decades. And Powell signaled that other such sharp rate hikes are coming.

The Powell Fed seeks to complete the infamous difficult – and dangerous – task of cooling the economy fast enough to slow inflation without causing a recession. Economists say such an outcome is possible, but unlikely with inflation so high.

Meanwhile, with some measures, American wages are rising at the fastest rate in 20 years. Higher pay allows more people to at least partially keep up with higher prices. But employers usually respond by charging customers more to cover their higher labor costs, which in turn increases inflationary pressures.

Last Friday’s jobs report for April included hourly wage data suggesting wage earnings were slowing, which, if continued, could help reduce inflation this year.

Copyright © 2022 by the Associated Press. All rights reserved.

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April 2022 US inflation rate report: Consumer prices jump 8.3% over past year but slowed from previous month’s 4-decade high Source link April 2022 US inflation rate report: Consumer prices jump 8.3% over past year but slowed from previous month’s 4-decade high

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