US inflation slowed in April after seven months of steady gains, according to new figures from the Labor Department.
Consumer prices rose 8.3% last month from 12 months earlier – below the 8.5% year-on-year rise seen in March, which was the highest rate since 1981.
Although the April figure was the first deceleration since August of last year, it was the seventh consecutive month of year-on-year increases of more than 6%.
The consumer price index rose 0.3% last month – the smallest gain since August and less than the 1.2% rise seen in March. The April figure was also above economists’ forecast of a 0.2% rise.
But analysts say the reprieve is likely to be temporary, with prices for fuel, food and global goods climbing again.
Pressure on global supply chains, exacerbated by China’s zero-COVID lockdowns, will also see prices rise, while the costs of air travel, hotel accommodation and new cars are also on the rise. likely to keep inflation high.
Core CPI (CPI excluding food and energy) rose 0.6% after rising 0.3% in March, and 6.2% from April last year.
US President Joe Biden this week acknowledged the pain that high inflation is causing Americans, promising that lowering prices is his “top priority”.
Last week, the Federal Reserve raised its key rate by half a percentage point – the biggest hike in 22 years – in a bid to exert some control over inflation.
Neil Wilson, chief market analyst for Markets.com, described the US CPI as “widening not peaking”, adding that “there are signs that there are more areas contributing to the increase (month on month)… which is bad for controlling inflation”.
As for what the numbers mean for the Federal Reserve, he said: “I don’t think a single hot CPI will make a summer…but the core reading scared off a lot of people who had understood the downside of this. and had tried to guess a smoother reading than what we got.Less peaking and more capping…higher for longer.
Rochelle Vaz, Partner at Global Capital Markets at Validus Risk Management, said: “While the CPI appears to have peaked in March largely due to a slowdown in oil prices, inflation is still uncomfortably high. and high inflation expectations are firmly entrenched.
“This does not bode well for the macro as the Fed will be forced to capitulate to a policy rate hike of more than 50 basis points (basis points) if the trend continues. printout of the May CPI to gauge how the Fed would react at its June meeting.
Major Wall Street indices opened lower on inflation data – the Dow Jones Industrial Average fell 0.12%, the S&P 500 opened lower 0.27%, while the Nasdaq Composite rose. fell 0.78%.
However, the Dow Jones and S&P then surged higher as investors focused on the monthly decline in the CPI.
The FTSE 100 in London lost much of its gains for the day as the data fell, but it also forged a rally to 1.25% higher on the day – buoyed, initially, by further weakening in the pound as the dollar gained traction again.
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