U.S. inflation rate slows to 8.3%, CPI shows, after hitting 40-year high

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The numbers: The yearly rate of US inflation fell to 8.3% in April to mark the first decline in eight months, but the upward pressure on prices is unlikely to ease rapidly enough to give Americans much relief anytime soon.

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The consumer price index rose by 0.3% last month, the government said Wednesdaymatching the smallest increase in eight months.

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Lower gas prices were the chief reason for the small rise in inflation last month. Oil prices surged after the Russian invasion of Ukraine and then leveled off in April.

The rate of inflation over the past year slowed to 8.3% from 8.5% — the first time it’s declined since last summer. The March reading was the highest since the end of 1981.

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Yet the so-called core rate of inflation, which omits food and energy, rose by a somewhat stronger 0.6%. Wall Street had forecast a 0.4% increase.

The increase in the core rate over the past year slowed to 6.2% from from a 40-year high of 6.5% in March.

The Federal Reserve views the core rate as a more accurate measure of inflationary trends, but most Americans still pay a large share of their budget for fuel and meals.

Big picture: Is the long-awaited surge in inflation finally over? Not yet, economists say. While most expect prices increases to slow, they say it’s going to take awhile.

For one thing, gas prices are on the rise again ahead of the summer driving season. And lockdowns in China could further disrupt the shipment of critical supplies that American companies need to produce their goods and services.

Many businesses have to pay more for materials and now rising wages are adding to their costs.

The Fed, for its part, plans to jack up US interest rates this year to try to choke off inflation. It’s already raised rates twice this year.

The April CPI report is unlikely to alter the Fed’s newly aggressive strategy to contain price pressures.

Market reaction: The Dow Jones Industrial Average DJIA,
-0.26%
and S&P 500 SPX,
+0.25%
were set to open higher in Wednesday trades.

Bond rates rose slightly. The higher-than-expected increase in the core rate of inflation disappointed Wall Street.

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Credit: www.marketwatch.com /

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