The pace of price increases in the US eased slightly in April 2022, as costs for petrol, used cars and clothing slipped.
According to the Labour Department, the annual pace of inflation was pegged at 8.3% last month (April 2022), down from 8.5% in March 2022. This marked the first decline in months, but the rate of price increases remained at a 40-year high.
The cost of groceries, housing and items like airline tickets continued to rise, putting pressure on policymakers to rein in the increases. US President, Joe Biden, on Wednesday, May 11, 2022, disclosed that the price increment remained “unacceptably high”, as he announced that plans are underway to bring down inflation, which he disclosed as his “top domestic priority”.
In the first week of this month (May 2022), the US Central Bank announced its biggest interest rate rise in 22 years, which hiked by half a percentage in an effort to tackle the issue.
Analysis by Analysts
According to Analysts, they expected the report to show a bigger slowdown in price acceleration, as the rapid run-up in prices, which was seen over the last 12 months started to lose steam. But a Senior US Economist for Capital Economics, Andrew Hunter, pointed out that “underlying inflation pressures are stronger than we had expected”.
The rise in prices in the US started rising in 2021, reflecting a strong economic rebound from the shock of the Coronavirus pandemic. Low-interest rates and government spending, which included cheques to households to cushion them from the impact of the Coronavirus shutdowns, helped to fuel demand.
At the same time, supply is constrained by ongoing Covid issues, labour shortages and the ongoing Russian invasion on Ukraine, which prompted a sharp spike in food and energy costs in March 2022. But those pressures were moderated in April last month (2022). According to the Labor Department’s Consumer Price Index, petrol prices fell by 6.1% in April 2022, after a more than 18% surge in March 2022. Grocery prices on the other hand gained 1% over the month, slowing from a 1.5% rise in March.
The cost of clothing also slipped 0.8% in April 2022, following six consecutive months of increases. But inflation continued to push up the cost of other items, eating into the purchasing power of consumers as wage gains failed to keep pace. Airfares also jumped 18.6% from March to April 2022, representing the largest one-month rise since record-keeping began in 1963. For new cars, the prices jumped 1.1%, while housing costs continued to climb steadily up by 0.5%.
Wells Fargo Economist, Sarah House, intimated that “The easing… to 8.3% year-over-year from 8.5% marks a start in returning inflation back to the Federal Reserve’s target [of 2%], but there remains a substantial way to go. Inflation remains widespread, making it all the more difficult to curtail”.
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