Inflation Finally Moved in the Right Direction in April

Year-over-year inflation ticked down to 3.4%
By Newser Editors and Wire Services
Posted May 15, 2024 8:11 AM CDT
Inflation Eased in April—for the First Time This Year
A customer prepares to purchase gas at a filling station in Chicago, Monday, April 22, 2024. On Wednesday, May 15, 2024, the Labor Department issues its report on inflation at the consumer level in April.   (AP Photo/Nam Y. Huh, File)

Consumer inflation in the US cooled slightly last month after three elevated readings, likely offering a tentative sigh of relief for officials at the Federal Reserve but not bringing things to a level that would indicate a rate cut is nigh, reports the AP. Prices rose 0.3% from March to April, the Labor Department said Wednesday, down slightly from 0.4% the previous month. Measured year-over-year, inflation ticked down from 3.5% to 3.4%. And a measure of underlying inflation, which excludes volatile food and energy costs, eased in April to 3.6% annually, which the Wall Street Journal reports is the lowest increase since April 2021. More:

  • Inflation's path: Inflation had been unexpectedly high in the first three months of this year after having steadily dropped in the second half of 2023. The elevated readings had dimmed hopes that the worst bout of inflation in four decades was being rapidly tamed.
  • Specific price gains: CNBC flags increases in shelter and energy. It calls the former "a particular trouble spot for Federal Reserve officials." Shelter costs were up 0.4% for the month and 5.5% from a year ago. Another "notable gain" was transportation services, which rose 0.9% for the month and was up 11.2% for the year. The energy index rose 1.1% for the month and 2.6% from last year. Prices for used and new vehicle dropped 1.4% and 0.4% respectively.

  • Jerome Powell's perspective: On Tuesday, Powell reiterated that he still expects inflation to ultimately reach the central bank's 2% target. But in remarks during a panel discussion in Amsterdam, Powell acknowledged that his confidence in that forecast has weakened after the first three readings of the year. Inflation has fallen sharply from 9.1% in the summer of 2022 but is higher now than in June 2023, when it first touched 3%. Powell underscored Tuesday that the Fed will keep its rate at that level for as long as needed to fully conquer inflation, a signal that rate cuts won't begin as soon as many people had hoped.

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  • Implications for November: Whether inflation continues its decline could have a significant effect on the presidential race. Republican critics of Biden have sought to pin the blame for high prices on the president and use it to try to derail his re-election bid. While hiring remains robust and wage growth, on average, healthy, prices remain generally well above their pre-pandemic levels.
(More inflation stories.)

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