Inflation in the US is falling from a maximum of 4 decades, but still hurts – Daily Local

Christopher Rugaber

WASHINGTON (AP) – Inflation slowed in April after seven months of relentless growth, suggesting that price hikes may peak, but are still putting a financial strain on U.S. households.

Consumer prices jumped 8.3% last month compared to last year, the government said on Wednesday. This was below 8.5% annual growth in March, which was the highest since 1981. Monthly prices rose 0.3% from March to April, the lowest increase in eight months.

However, Wednesday’s report contained some warning signs that inflation could pick up. Excluding volatile food and energy categories, so-called basic prices jumped twice as much from March to April than the previous month. The increase was caused by rising prices for airline tickets, hotel rooms and new cars. The cost of renting an apartment also continued to rise.

These price jumps make it clear that there is still a long way to go before inflation returns to a more acceptable level, ”said Eric Vinograd, an American economist at Asset Manager AB.

Even if it is moderate, inflation is likely to remain high in 2023, economists say, leaving many Americans burdened by rising prices that outpaced wage growth. Low-income families and families of blacks and Latinos, who are disproportionately squeezed by more expensive food, gas and rents, have been particularly hard hit.

So far, lower gas prices in April have helped slow overall inflation. Nationwide, average prices per gallon of gas fell to $ 4.10 in April, according to the AAA, after rising to $ 4.32 in March. But since then, gas prices have risen to a record $ 4.40 a gallon.

Food prices continue to rise, in part because Russia’s invasion of Ukraine has raised the price of wheat and other grains. Food prices rose 1% from March to April and almost 11% compared to last year. This growth compared to the same period is the largest since 1980.

Anxiety 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. Like gas prices in the US. And blocking COVID-19 in China could worsen supply chains.

In April, air fares rose by a record 18.6%, the largest monthly increase since 1963. From March to April, hotel prices jumped by 1.7%.

Last month, Southwest Airlines said it expects much more revenue and revenue this year as Americans fill airports after postponing travel for two years. The company said its average fare had risen 32% in the first three months of the year compared to the same period last year to $ 159.

There are signs that supply chains for some goods are improving. A report on Wednesday shows that prices for machinery and clothing fell 0.8%, while the cost of used cars fell 0.4%, the third straight in a row. Used cars and other goods led to an initial jump in inflation last year when Americans increased spending after vaccines became widespread.

The escalation of consumer inflation has forced many Americans, especially low- or fixed-income people, to cut their spending on things like driving and buying groceries. Among them is Patty Blackman, who said she traveled less to her grandchildren’s sporting events since gas rose to $ 5.89 in Las Vegas, where she lives.

To save money, the 68-year-old Blackman also did not visit the barber for 18 months. And she is reconsidering her plan to go this summer to visit relatives in Arkansas.

She said she was recently shocked to see that half a gallon of organic milk had reached $ 6.

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

Blackmon has cut meat, and “steak is almost out of the question,” she said. Instead, she eats more salads and canned soups.

57-year-old David Irby of Halifax, Virginia, said he also cuts food and other expenses. A veteran who retired on disability in 2015 as a police officer, Irby said he switched to chicken from beef, quit buying bacon and doesn’t buy junk food like his favorite Cheetos treat.

Irby’s biggest concern is the replacement of his 22-year-old Ford truck, which is unreliable on long journeys. The new one costs $ 50,000, while the five-year used version costs about $ 40,000.

“I don’t know how people with a fixed income can buy a vehicle now,” he said. “It took me almost two years to earn $ 40,000.”

In addition to financial tensions for households, inflation poses a serious political problem for President Joe Biden and Democrats in Congress during the midterm elections, and Republicans say Biden’s $ 1.9 trillion financial support package overheated the economy last March, filling the economy its incentive checks, reinforced unemployment benefits and child tax credit payments.

On Tuesday, Biden tried to take the initiative and declared inflation “the number one problem facing families today” and “my top domestic priority.”

Previous signs that inflation in the US may peak are not continuing. Price growth slowed in August and September last year, suggesting that the rise in inflation may be temporary, as many economists – and officials of the Federal Reserve – believe. But in October, prices rose again, forcing Fed Chairman Jerome Powell to start changing policies toward higher rates.

Figures on Wednesday will allow the Fed to realize what could be the fastest series of rising interest rates in 33 years, economists say. Last week, the Fed raised its base short-term rate by half a point, the sharpest rise in two decades. And Powell has signaled that such drastic rate hikes will be even greater.

Powell’s Fed is committed to fulfilling the certainly 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 such high inflation.

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Associated Press writer Anne D’Innocent of New York contributed to this report.