rain.png
Friday July 1st, 2022 6:12PM

US inflation hit 8.3% last month but slows from 40-year high

By The Associated Press

WASHINGTON (AP) — Inflation slowed in April after seven months of relentless gains, a tentative sign that price increases may be peaking while still imposing a financial strain on American households.

Consumer prices jumped 8.3% last month from 12 months earlier, the Labor Department said Wednesday. That was below the 8.5% year-over-year surge in March, which was the highest since 1981. On a month-to-month basis, prices rose 0.3% from March to April, the smallest increase in eight months.

Still, Wednesday's report contained some cautionary signs that inflation may be becoming more entrenched. Excluding the volatile food and energy categories, so-called core prices jumped 0.6% from March to April — twice the 0.3% rise from February to March. Those increases were fueled by spiking prices for airline tickets, hotel rooms and new cars. Apartment rental costs also continued to rise steadily.

The sharp price gains from March to April “make clear that there is still a long way to go before inflation returns to more acceptable levels,” said Eric Winograd, U.S. economist at asset manager AB.

Some individual categories of goods have skyrocketed over the past year. Grocery prices, for example, have shot up 10.8%, the largest year-over-year jump since 1980. The cost of a gallon of gas fell 6.1% in April but is still up nearly 44% from a year ago.

And so far in May, prices at the gas pump have reached new highs. Nationally, the average for a gallon of gas is at a record $4.40, according to AAA, though that figure isn’t adjusted for inflation. The high price of oil is the main reason. A barrel of U.S. benchmark crude sold for around $100 a barrel Tuesday. Gas had fallen to about $4.10 a gallon in April, after reaching $4.32 in March.

The escalation of consumer inflation has forced many Americans, particularly people with lower or fixed incomes, to reduce their spending on things like driving and grocery shopping. Among them is Patty Blackmon, who said she's been driving to fewer of her grandchildren's sports events since gas spiked to $5.89 in Las Vegas, where she lives.

To save money, Blackmon, 68, also hasn't visited her hairdresser in 18 months. And she's reconsidering her plan to drive this summer to visit relatives in Arkansas.

She was shocked recently, she said, to see a half-gallon of organic milk reach $6.

“Holy cow!” she thought. “How do parents give their kids milk?”

Blackmon has cut back on meat, and “a steak is almost out of the question.” Instead, she is eating more salads and canned soups.

Beyond the financial strain for households, inflation is posing a serious political problem for President Joe Biden and congressional Democrats in the midterm election season, with Republicans arguing that Biden’s $1.9 trillion financial support package last March overheated the economy by flooding it with stimulus checks, enhanced unemployment aid and child tax credit payments.

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

Biden blamed chronic supply chain snarls related to the swift economic rebound from the pandemic, as well as Russia’s invasion of Ukraine, for igniting inflation. He said his administration will help ease price increases by shrinking the government’s budget deficit and by fostering competition in industries, like meatpacking, that are dominated by a few industry giants.

Still, new disruptions overseas or other unforeseen problems could always send U.S. inflation back up to new highs. If the European Union decides, for example, to cut off Russian oil, gas prices in the United States would likely accelerate. China’s severe COVID lockdowns are worsening supply problems and hurting growth in the world’s second-biggest economy.

Jose Torres, a senior economist at Interactive Brokers, noted that China's weakening economy has reduced demand for oil. If China eases its lockdowns later this year and if more people drive, world oil prices could go higher and further inflate gas prices in the U.S.

Previous signs that U.S. inflation might be peaking didn’t last. Price increases decelerated last August and September, suggesting at the time that higher inflation might be temporary, as many economists — and officials at the Federal Reserve — had suggested. But prices shot up again in October, prompting Fed Chair Jerome Powell to start shifting policy toward higher rates.

While food and energy have endured some the worst price spikes of the past year, analysts often monitor the core figure to get a sense of underlying inflation. Core inflation also typically rises more slowly than the overall price increases and can take longer to decline. Rents, for example, are rising at a historically fast pace, and there is little sign of that trend reversing anytime soon.

The unexpected persistence of high inflation has caused the Fed to embark on what may become its fastest series of interest rate increases in 33 years. Last week, the Fed raised its benchmark short-term rate by a half-point, its steepest increase in two decades. And Powell signaled that more such sharp rate hikes are coming.

The Powell Fed is seeking to pull off the notoriously difficult — and risky — task of cooling the economy enough to slow inflation without causing a recession. Economists say such an outcome is possible but unlikely with inflation this high.

In the meantime, by some measures Americans’ wages are rising at the fastest pace in 20 years. Their higher pay enables more people to at least partly keep up with higher prices. But employers typically respond by charging customers more to cover their higher labor costs, which, in turn, heightens inflationary pressures.

Last Friday’s jobs report for April included data on hourly pay that suggested that wage gains were slowing, which, if it continues, could help ease inflation this year.

  • Associated Categories: U.S. News, Associated Press (AP), AP National News, AP Online National News, Top U.S. News short headlines, Top General short headlines, AP Business, AP Business - Economy, AP Business - Personal Finance
© Copyright 2022 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Britain pledges to defend Sweden if attacked
Britain has signed a security assurance with Sweden which like its neighbor Finland is pondering whether to join NATO following Russia’s invasion of Ukraine, pledging to “bolster military ties” in the event of a crisis and support both countries should they come under attack
8:33AM ( 9 minutes ago )
US, Western Europe fret over uncertain Ukraine war endgame
Russia’s war in Ukraine is grinding into its third month with little sign of a decisive military victory for either side, and no resolution in sight
8:32AM ( 9 minutes ago )
Ukraine cuts Russia gas at 1 hub, underlining risk to supply
Ukraine stopped the flow of Russian natural gas through one hub that feeds European homes and industry
8:27AM ( 14 minutes ago )
Associated Press (AP)
For Supreme Court justices, secrecy is part of the job
Supreme Court justices have long prized confidentiality
7:00AM ( 1 hour ago )
Democrats' bill would make Roe v. Wade law and expand it
Abortion legislation facing a Senate test vote would enshrine into federal law the landmark 1973 Roe v
6:56AM ( 1 hour ago )
Group of Ukrainian athletes train in Albania, miss home
A group of young Ukrainian track and field athletes have made their way to safety in Albania after fleeing from a war zone
6:27AM ( 2 hours ago )
AP National News
Battery-powered Greek island bets on green future
The remote Greek island of Tilos has pioneered a recycling plant that could act as a blueprint for other islands — including popular holiday destinations — that struggle with waste disposal
7:14AM ( 1 hour ago )
Live updates | Official: Plans for Kherson annexation
A Russia-installed official in Ukraine’s Kherson region says the region’s administration will ask Russian President Vladimir Putin to annex the region
6:49AM ( 1 hour ago )
UK ramps up threat to rewrite Brexit deal with the EU
Britain and the European Union are once again at loggerheads over Brexit
6:18AM ( 2 hours ago )
AP Business
House approves $40B in Ukraine aid, beefing up Biden request
The House has emphatically approved a fresh $40 billion Ukraine aid package that beefs up President Joe Biden’s initial request
1:13AM ( 7 hours ago )
Asian stocks mixed, China gains ahead of US price data
Shares are mixed in Asia with Chinese benchmarks pressing higher after a rally in technology companies helped reverse most of an early slide on Wall Street
12:05AM ( 8 hours ago )
Live updates | Russia-Ukraine War
The U.S. House has emphatically approved a fresh $40 billion Ukraine aid package that beefs up President Joe Biden’s initial request
10:20PM ( 10 hours ago )
AP Business - Economy
'Roe' under threat, California leans in as abortion refuge
California is preparing for a world without federal abortion protections
12:14PM ( 4 days ago )
Growing African mangrove forests aim to combat climate woes
In a bid to protect coastal communities from climate change and encourage investment, African nations are increasingly turning to mangrove restoration projects, with Mozambique becoming the latest addition to the growing list of countries with large scale mangrove initiatives
2:17AM ( 5 days ago )
COVID coverage for all dries up even as hospital costs rise
For the first time, the U.S. came close to providing health care for all for the first time during the coronavirus pandemic
12:02AM ( 5 days ago )
AP Business - Personal Finance
Britain pledges to defend Sweden if attacked
Britain has signed a security assurance with Sweden which like its neighbor Finland is pondering whether to join NATO following Russia’s invasion of Ukraine, pledging to “bolster military ties” in the event of a crisis and support both countries should they come under attack
8:33AM ( 9 minutes ago )
Sri Lanka deploys troops in capital after violence, protests
Sri Lankan authorities have deployed armored vehicles and troops in the streets of the capital two days after pro-government mobs attacked peaceful protesters, triggering a wave of violence across the country
8:10AM ( 32 minutes ago )
US casinos had best month ever in March, winning $5.3B
Inflation may be soaring, supply chains are snarled and the coronavirus just won’t go away
8:08AM ( 34 minutes ago )
Ukraine cuts Russia gas at 1 hub, underlining risk to supply
Ukraine stopped the flow of Russian natural gas through one hub that feeds European homes and industry
7:58AM ( 43 minutes ago )
Iran detains 2 Europeans; EU envoy in Tehran about nuke deal
Iran’s Intelligence Ministry announced it had detained two Europeans shortly before the European Union envoy met Iran’s nuclear negotiator in Tehran in a last-ditch attempt to salvage Iran’s nuclear deal with world powers
7:36AM ( 1 hour ago )