Inflation Slowed in April, but Remains Near 40-Year High

May 11, 2022

U.S. inflation cooled slightly last month but remained near the highest level in four decades as economists worry that upward price pressures are broadening.

The consumer price index (CPI) climbed at an annual rate of 8.3% in April, according to the Bureau of Labor Statistics. That’s down slightly from March’s 8.5% annual increase, but higher than most forecasts. The decline was primarily due to a temporary drop in gasoline prices, which have since climbed to new highs.

On a monthly basis, the CPI climbed just 0.3% in April, much slower than March’s 1.2% monthly increase. However, the so-called “core” CPI, which strips out volatile components like food and energy, increased 0.6% on a monthly basis, a sharp acceleration from March’s 0.3% gain, suggesting that inflationary pressure is broadening.

While material shortages and supply chain issues have driven goods prices higher, services prices are also climbing, driven in part by higher wages. Services prices, excluding energy, rose 0.7% in April from the month prior, the fastest month-over-month increase since 1990.

It remains to be seen if inflation has peaked or if this month’s slowdown is just a temporary reprieve. Regardless, there are many factors that will keep prices elevated at least through the summer. Russia’s invasion of Ukraine has put pressure on food and energy prices, and continued lockdowns in China may exacerbate supply chain issues.

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