Inflation dips from four-decade high but still causing pain
Report shows signs that rising costs will continue into 2023
Inflation eased slightly in April after months of relentless increases but remained near a four-decade high, making it hard for millions of American households to keep up with surging prices.
Consumer prices jumped 8.3 percent last month from a year ago, the government said Wednesday.
That was below the 8.5 percent year-over-year surge in March, which was the highest since 1981. On a monthly basis, prices rose 0.3 percent from March to April, the smallest rise 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 twice as much from March to April as they did the previous month. The increases were fueled by spiking prices for airline tickets, hotel rooms and new cars. Apartment rental costs also kept rising.
Those price jumps “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.
Even if it moderates, inflation will likely remain high well into 2023, economists say, leaving many Americans burdened by price increases that have outpaced pay raises. Especially hurt are lower-income and Black and Hispanic families, who on average spend a greater proportion of their incomes on gas, food and rent.
high inflation last longer than it expected.
Wednesday’s report from the U.S. Labor Department showed inflation slowed a touch in April, down to 8.3 percent from 8.5 percent in March. Investors also found some glass-half-full signals in the data that inflation may be peaking and set to ease.
Nevertheless, the numbers were still higher than economists forecast. They also showed a bigger increase than expected in prices outside food and gasoline, something economists call “core inflation” and which can be more predictive of future trends.
“Core inflation came in hot, and that’s what really matters to the Fed at this point,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.
Economists said the inflation report will keep the Fed on track for rapid and potentially sharp increases in interest rates in upcoming months.
Treasury yields initially jumped but pared their gains as the morning progressed. The 10-year Treasury yield climbed as high as 3.08 percent but fell back to 2.92 percent in later trading, below its late-tuesday level of 2.99 percent.
The S&P 500 fell 65.87 points to 3,935.18, while the Nasdaq slid 373.44 points to 11,364.24. Both indexes posted five straight weekly losses heading into this week.
The Dow dropped 326.63 points to 31,834.11. The bluechip index has racked up six straight weekly losses. The Russell 2000 fell 43.65 points, or 2.5 percent, to 1,718.14.