Inflation still driving U.S. prices at a rapid pace

New data shows annual rate improvements but consumer price index rises 8.3 percent

The pressures that have kept inflation elevated for months remain strong, fresh data released Wednesday showed, a challenge for households that are trying to shoulder rising expenses and for the White House and Federal Reserve as they try to put the economy on a steadier path.

Annual inflation moderated for the first time in months in April, but the consumer price index still increased 8.3 percent, an uncomfortably rapid pace. At the same time, a closely watched measure that subtracts food and fuel costs accelerated.

Core inflation — which excludes costs for groceries and gas — picked up 0.6 percent in April from the prior month, faster than its 0.3 percent increase in March. That measure is particularly important for policymakers, who use it as a gauge to help determine where inflation is headed.

While the letup in annual inflation gave President Joe Biden and the Fed a dose of comfort, the overall picture remains worrying. Policymakers have a long way to go to bring price increases down to more normal and stable levels, and the newest data is likely to keep them focused on trying to slow an inflation rate that remains near its fastest pace in 40 years.

“Inflation is too high; they need to bring it down,” said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives. “The reacceleration in core inflation is unwelcome.”

Stocks were turbulent Wednesday, swinging between gains and losses as investors tried to parse the latest data. The S&P 500 ended the day down

1.6 percent.

Annual inflation may have now peaked, having climbed by an evenquicker 8.5 percent in March. The April slowdown came partly because gas prices dropped last month and partly because of a statistical quirk that will continue through the months ahead. Yearly price changes are now being measured against elevated price readings from last spring, when inflation started to take off. The higher base makes annual increases look less severe.

Still, even the White House greeted the new report with concern.

“While it is heartening to see that annual inflation moderated in April, the fact remains that inflation is unacceptably high,” Biden said in a statement. “Inflation is a challenge for families across the country, and bringing it down is my top economic priority.”

Economists do expect price increases to continue to ebb somewhat this year because they think that consumer demand will taper off and supply-chain stresses will ease. The crucial question is how much and how quickly that moderation might happen.

Many analysts have been predicting a slowdown in price increases or even outright price cuts on many goods, but those forecasts look increasingly uncertain. Lockdowns in China and the war in Ukraine threaten to exacerbate supply shortages for semiconductor chips, commodities and other important products.

The Fed aims for 2 percent annual inflation on average, though it defines that goal using a related but different measure that tends to run slightly lower and comes out with more of a delay. That inflation index picked up 6.6 percent in the year through March, and April figures will be released later this month.