WASHINGTON (AP) – Inflation slowed in April after seven months of relentless gains, a sign that price increases could peak while still putting financial strain on US households.
Consumer prices jumped 8.3% last month from a year earlier, the government said on Wednesday. This was below 8.5% year-on-year growth in March, the highest since 1981. On a monthly basis, prices rose 0.3% from March to April, the lowest increase in eight months.
However, Wednesday’s report contains some warning signs that inflation may increase. Excluding variable food and energy categories, so-called basic prices jumped twice as much from March to April as in the previous month. The increases are fueled by a sharp rise in the prices of airline tickets, hotel rooms and new cars. The cost of renting apartments is also constantly rising.
These price spikes “make it clear that there is still a long way to go before inflation returns to more acceptable levels,” said Eric Vinograd, an American economist at Asset Manager AB.
Even if it slows down, inflation is likely to remain high in 2023, economists say, leaving many Americans burdened by price hikes that outpace wage increases. Low-income families and blacks and Spanish families, who are disproportionately pressured by more expensive food, gas and rent, have been particularly hard hit.
So far, the fall in gas prices in April has helped slow overall inflation. Nationally, average gallon gas prices fell to $ 4.10 in April, according to the AAA, after rising to $ 4.32 in March. But gas prices have risen to a record $ 4.40 a gallon since then.
Food prices are still rising, in part because Russia’s invasion of Ukraine has raised the price of wheat and other cereals. Food prices rose 1% from March to April and nearly 11% from a year ago. This increase compared to the previous year is the largest since 1980.
Concussions abroad could accelerate inflation in the coming months. If the European Union, for example, decides to ban Russian oil imports, world oil prices could rise. As well as gas prices in the United States. And blocking COVID in China could exacerbate supply chain disruptions.
In April, plane tickets jumped by a record 18.6%, the largest monthly increase since the start of record keeping in 1963. Hotel prices jumped 1.7% from March to April.
Southwest Airlines said last month that it expects much higher revenues and profits this year as Americans flood airports after postponing the trip for two years. The company said its average tariff had risen 32 percent in the first three months of the year from the same period last year to $ 159.
There are indications that supply chains are improving for some goods. Wednesday’s report showed that prices of appliances and clothing fell by 0.8%, while the price of used cars fell by 0.4%, the third consecutive decline. Used cars and other goods led much of the initial jump in inflation last year as Americans increased spending as vaccines became widespread.
The escalation of consumer inflation has forced many Americans, especially those on lower or fixed incomes, to reduce their spending on things like driving and shopping for groceries. Among them is Patti Blackman, who said she drove to fewer sporting events for her grandchildren after gasoline jumped to $ 5.89 in Las Vegas, where she lives.
To save money, the 68-year-old Blackmon has also not visited her hairdresser for 18 months. And she is reconsidering her plan to drive this summer to visit relatives in Arkansas.
She was shocked recently, she said, when she saw half a gallon of organic milk reach $ 6.
“Sacred cow!” she thought. “How do parents give milk to their children?”
Blackmon cut meat and “steak is almost impossible to talk about,” she said. Instead, she eats more salads and canned soups.
David Irby, 57, of Halifax, Virginia, said he was also cutting food costs and more. A veteran who retired with a disability in 2015 as a police officer, Erby said he switched to beef chicken, stopped buying bacon and did not buy junk food like his favorite Cheetos.
Irby’s biggest concern is replacing his 22-year-old Ford truck, which is unreliable on long journeys. A new one costs $ 50.00, while the five-year version used is about $ 40,000.
“I don’t know how people on a fixed income can buy a vehicle now,” he said. “It took me almost two years to make $ 40,000.”
In addition to financial tensions for households, inflation poses a serious political problem for President Joe Biden and Democrats in Congress in the mid-election season, with Republicans claiming Biden’s $ 1.9 trillion financial support package overheated the economy last March, flooding it with incentives, increased unemployment benefits and tax credit payments for children.
On Tuesday, Biden tried to take the lead, declaring inflation “the number one problem facing families today” and “my top domestic priority.”
Previous signs that inflation in the United States may be at its peak have not continued. The rise in prices slowed last August and September, suggesting at the time that higher inflation could be temporary, as many economists and Federal Reserve officials have suggested. But prices rose again in October, prompting Fed Chairman Jerome Powell to begin changing his policy toward higher interest rates.
Wednesday’s data will keep the Fed on track to implement what could become its fastest series of 33-year interest rate hikes, economists said. Last week, the Fed raised its base short-term interest rate by half a point, its sharpest increase in two decades. And Powell signaled that there will be more such sharp increases in interest rates.
Powell’s Federal Reserve seeks to fulfill the notoriously difficult and risky task of cooling the economy enough to slow inflation without causing a recession. Economists say such a result is possible, but unlikely with such high inflation.
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Associated Press writer Ann D’Inocenzio of New York contributed to this report.
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