Please ensure Javascript is enabled for purposes of website accessibility
US Inflation Dips From 4-Decade High but Still Causing Pain
gvw_ap_news
By Associated Press
Published 2 years ago on
May 11, 2022

Share

 

Inflation slowed in April after seven months of relentless gains, a tentative sign that price increases may be peaking while still imposing a financial strain on American households.

Consumer prices jumped 8.3% last month from a year ago, the government said Wednesday. That was below the 8.5% year-over-year surge in March, which was the highest since 1981. On a monthly basis, prices rose 0.3% from March to April, the smallest increase 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 are disproportionately squeezed by costlier food, gas and rent.

For now, a fallback in gas prices in April helped slow overall inflation. Nationally, average prices for a gallon of gas fell to as low as $4.10 in April, according to AAA, after spiking to $4.32 in March. But since then, gas prices have surged to a record $4.40 a gallon.

Grocery prices are still spiking, in part because Russia’s invasion of Ukraine has heightened the cost of wheat and other grains. Food prices rose 1% from March to April and nearly 11% from a year ago. That year-over-year increase is the biggest since 1980.

Turmoil overseas could accelerate inflation in the coming months. If the European Union, for example, decides to bar imports of Russian oil, world oil prices could rise. So could U.S. gas prices. And China’s COVID lockdowns could worsen supply chain snarls.

In April, airfares soared a record 18.6%, the largest monthly increase since record-keeping began in 1963. Hotel prices jumped 1.7% from March to April.

Southwest Airlines said last month that it is expecting much higher revenue and profits this year as Americans flood the airports after postponing travel for two years. The company said its average fare soared 32% in the first three months of the year from the same period last year to $159.

There are signs that supply chains are improving for some goods. Wednesday’s report showed prices for appliances and clothing both fell 0.8%, while the cost of used cars dropped 0.4%, the third straight decline. Used cars and other goods drove much of the initial inflation spike last year as Americans stepped up spending after vaccines became widespread.

The escalation of consumer inflation has forced many Americans, particularly people with lower or fixed incomes, to reduce their spending on things like driving and grocery shopping. Among them is Patty Blackmon, who said she’s been driving to fewer of her grandchildren’s sports events since gas spiked to $5.89 in Las Vegas, where she lives.

To save money, Blackmon, 68, also hasn’t visited her hairdresser in 18 months. And she’s reconsidering her plan to drive this summer to visit relatives in Arkansas.

She was shocked recently, she said, to see a half-gallon of organic milk reach $6.

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

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

David Irby, 57, of Halifax, Virginia, said he is also cutting back on food and other expenses. A veteran who retired on disability in 2015, Irby said he has switched to chicken from beef, quit buying bacon and doesn’t buy junk food like his favorite treat, Cheetos.

Irby’s biggest worry is replacing his 22-year-old Ford truck, which isn’t reliable on long trips. A new one costs $50,000 while a five-year old used version is about $40,000.

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

Beyond the financial strain for households, inflation is posing a serious political problem for President Joe Biden and congressional Democrats in the midterm election season, with Republicans arguing that Biden’s $1.9 trillion financial support package last March overheated the economy by flooding it with stimulus checks, enhanced unemployment aid and child tax credit payments.

On Tuesday, Biden sought to take the initiative and declared inflation “the No. 1 problem facing families today” and “my top domestic priority.”

Previous signs that U.S. inflation might be peaking didn’t last. Price increases decelerated last August and September, suggesting at the time that higher inflation might be temporary, as many economists — and officials at the Federal Reserve — had suggested. But prices shot up again in October, prompting Fed Chair Jerome Powell to start shifting policy toward higher rates.

Wednesday’s figures will keep the Fed on track to implement what may become its fastest series of interest rate increases in 33 years, economists said. Last week, the Fed raised its benchmark short-term rate by a half-point, its steepest increase in two decades. And Powell signaled that more such sharp rate hikes are coming.

The Powell Fed is seeking to pull off the notoriously 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 inflation this high.

One of the Fed’s biggest concerns is that Americans might start to expect chronically high inflation, which can make rising prices harder to bring under control because such expectations can be self-fulfilling. If Americans expect costs to rise, they will likely demand higher pay. Those higher labor costs, in turn, can force companies to charge more, thereby heightening inflation.

So far, measures of longer-term inflation expectations have stayed largely in check even as prices have soared.

Still, some people are starting to push for higher wages as prices rise.

“We haven’t had raises yet based on inflation and we think we should because now inflation is so high,” Rochelle Guillou, 26, said, referring to her and her friend Hannah Lerman, who work at a startup in Boston.

Lerman, 25, said she thinks the cost of everything from food to online delivery services to clothes is on the way up.

“Rent is a huge issue,” she said. “They’re actually trying to sell my building right now, so we know our rent is going to go up. We don’t even know how much but yeah, rent is going crazy.”

RELATED TOPICS:

DON'T MISS

Surprising Ways and Places You Can Use SNAP EBT Food Benefits

DON'T MISS

Californians Worry About Crime, Setting up a Ballot Measure Showdown

DON'T MISS

The Pickle Flavor Frenzy and Its Rise in Food Trends

DON'T MISS

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

DON'T MISS

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

DON'T MISS

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

DON'T MISS

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

DON'T MISS

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

DON'T MISS

Real Estate Experts Talk Fresno’s Economic Future. Are Tough Times Ahead?

DON'T MISS

Unlocking the Secrets to Fresno State’s Superb Baseball Season

UP NEXT

Real Estate Experts Talk Fresno’s Economic Future. Are Tough Times Ahead?

UP NEXT

Wired Wednesday: How High Will the Price of Gold & Silver Go?

UP NEXT

BTC Scammy Scams, Impact of Blockchain on Global Markets: Crypto The WonderDog Show

UP NEXT

Barbara Corcoran: 1% Interest Rate Drop Will Send Housing Prices ‘Through the Roof’

UP NEXT

Coalition: CA Lawmakers Need to Roll Back Proposed ‘Utility Tax’

UP NEXT

Wall Street’s Mixed Trading Day

UP NEXT

Fresno Coin Gallery Owner Reveals Why Gold & Silver Are Hot Investments

UP NEXT

Biden’s Embrace of Trump’s Tariffs Could Spell Trouble for His Reelection: Fareed Zakaria

UP NEXT

Ship That Caused Bridge Collapse Had Apparent Electrical Issues While Still Docked, Source Says

UP NEXT

How California Legislators Got More Than $1.4 Million in Travel and Gifts in 2023

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

2 days ago

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

2 days ago

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

2 days ago

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

3 days ago

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

3 days ago

Real Estate Experts Talk Fresno’s Economic Future. Are Tough Times Ahead?

3 days ago

Unlocking the Secrets to Fresno State’s Superb Baseball Season

3 days ago

‘This Is How to Improve Reading Proficiency. We Just Have To Execute It’: FUSD Board President

3 days ago

Does Dyer Support (or Endorse) Bredefeld for Supervisor?

3 days ago

Get a 3D First Look at Merced’s High-Speed Rail Station Design

3 days ago

Surprising Ways and Places You Can Use SNAP EBT Food Benefits

Did you know that SNAP EBT benefits used to be called food stamps and that recipients can use those benefits to get healthy food in places o...

1 day ago

1 day ago

Surprising Ways and Places You Can Use SNAP EBT Food Benefits

1 day ago

Californians Worry About Crime, Setting up a Ballot Measure Showdown

2 days ago

The Pickle Flavor Frenzy and Its Rise in Food Trends

2 days ago

Kate Hudson Had a Lifetime to Make a Record. The Result is ‘Glorious,’ Out in May

2 days ago

Long-Lost First Model of USS Enterprise from ‘Star Trek’ Boldly Goes Home

2 days ago

California Leaders Take Sides in Monumental Supreme Court Case on Homelessness

3 days ago

Man Sets Himself on Fire Outside Trump Hush Money Trial Court

3 days ago

McDonald’s Ice Cream Machines Are So Unreliable They’re a Meme. They Might Also Be a Climate Solution.

MENU

CONNECT WITH US

Search

Send this to a friend