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The U.S. Bureau of Labor Statistics today announced that the Consumer Price Index, often considered the inflation rate, increased by .3% in April on a seasonally adjusted basis. It had risen 1.2% in March.
“Has inflation peaked? Maybe. The Consumer Price Index increased 8.3% for the 12 months ending April, down from the 8.5% increase for the period ending in March,” said First American Deputy Chief Economist Odeta Ksuhi. “This was the first drop in eight months, but April's report shows the breadth of price increases in the economy which, alongside rising wages, indicates that inflation will likely remain very hot for some time. This report should not, and likely will not slow Fed tightening.”
Cleveland Federal Reserve Bank President Loretta Mester said she favors half-point interest-rate increases but would support bigger increments later if inflation doesn’t ease by the second half of the year.
“We don’t rule out 75 forever, right? The cadence we’re going now seems about right to me,” Mester said during an interview on Bloomberg Television. “We’re going to have to assess whether inflation is actually moving down, and then we’ll be able to get more information after we do a couple of those to see,” she added, referring to 50 basis-point hikes.
Increases in shelter, food, airline fares and new vehicles were the largest contributors to the increase in April. Expenses for food rose the most, with the food index increasing .9% and the food at home index increasing to 1%, the bureau said.
"The largest component in CPI is shelter, which accounts for over 32% of its total,” Kushi said. “The largest components in this basket are rent of primary residence and owner’s equivalent rent of residence. By virtue of how it is measured, however, shelter inflation lags observed rental and house price increases by approximately one a year.”
"The most striking aspect of the CPI report is that it would have been even worse if not for the temporary relief at the gas pump we got last month," said Duke University economics professor Connel Fullenkamp. "But as we now know, that's over, and fuel prices are rising aggressively once again, especially diesel fuel.
"That's likely to feed into many other prices, since a huge volume of freight has shifted from rail to trucking. Since shipping is a big part of the prices of everything, especially groceries, we can expect to see those prices continue to rise in the near future, keeping future inflation rates high," he added.
The all-items index increased 8.3% for the 12 months ending in April, a smaller increase than the 8.5% figure for the period ending in March,” the U.S. Bureau of Labor Statistics said. “The all items less food and energy index rose 6.2% over the last 12 months. The energy index rose 30.3% over the last year, and the food index increased 9.4%, the largest 12-month increase since the period ending April 1981.”