Inflation in the US hit 8.3 percent in April, falling slightly from the four-decade high it reached in March and breaking a streak of seven consecutive monthly increases in the annual rate of price increases.
The latest inflation report marks a mixed bag of news for consumers, showing that grocery prices are rising at their fastest annual rate in 42 years and flashing other signals that inflation is becoming more entrenched.
Still, President Joe Biden in a statement touted the dip in the annual ‘headline’ inflation number — which seems to be dropping mostly because prices began soaring a year ago, making the basis for comparison higher.
‘While it is heartening to see that annual inflation moderated in April, the fact remains that inflation is unacceptably high,’ said Biden. ‘As I said yesterday, inflation is a challenge for families across the country and bringing it down is my top economic priority.’
The Labor Department’s report on Wednesday said that the consumer price index increased 0.3 percent in April from the month before, for a 8.3 percent gain from a year ago, compared to March’s 8.5 percent increase.
The food index increased 9.4 percent from last year, the largest 12-month increase since 1981, and the energy index soared 30.3 percent from a year ago.
Excluding volatile food and energy prices, so-called ‘core’ inflation hit 6.3 percent in the 12 months ending in April, down slightly from March’s annual rate of 6.5 percent.
However, in a troubling sign inflation is becoming more entrenched, core prices jumped 0.6 percent from March to April – twice the 0.3 percent rise from February to March. Those increases were fueled by spiking prices for airline tickets, hotel rooms and new cars. Rental costs also rose sharply.
Over the past year, grocery prices have shot up 10.8 percent, the largest such year-over-year increase since 1980. Food away from home was up 7.2 percent from a year ago.
The cost of a gallon of gas fell 6.1 percent in April but is still up nearly 44 percent from a year ago.
And so far in May, prices at the gas pump have shot back up. Nationally, the average for a gallon of gas was at a record high of $4.40 on Wednesday, according to AAA.
The high price of oil is the main factor. A barrel of U.S. benchmark crude sold for around $100 a barrel Tuesday. Gas had fallen to about $4.10 a gallon in April, after reaching its prior record high of $4.32 in March.
Though it remains well elevated over the Federal Reserve’s 2 percent target rate, April’s annual inflation reading marks a sign of relief from the prior month, and will likely be touted as progress by Biden.
Experts say that annual inflation eased as energy prices grew at a more modest pace in April — though that effect could prove short-lived, after US gasoline prices hit a new high this week.
‘April also marks a full year since prices started to dramatically increase, meaning that it’s going to become more and more difficult for 12-month inflation to remain as elevated as it was in March,’ noted John Leer, Morning Consult Chief Economist.
Inflation has become a top political threat to Biden and congressional Democrats as the crucial November midterm elections draw closer. Small business owners now say in surveys that it’s their primary economic concern, too.
In a statement responding to the April inflation report, Biden said he had confidence in the Federal Reserve to fight inflation, and touted his policies.
‘Beyond the Fed, my inflation plan is focused on lowering the costs that families face and lowering the federal deficit,’ he said, citing a program to reduce the cost of high speed internet.
‘Congressional Republicans talk about inflation, but their only plan is to raise taxes on working families, taking even more money out of their pockets,’ he added.
Biden sought to take the initiative Tuesday and declared inflation ‘the No. 1 problem facing families today’ and ‘my top domestic priority.’
‘I know you gotta be frustrated. I can taste it,’ Biden said, speaking to the country from the White House. ‘I think our policies have helped, not hurt.’
Biden blamed chronic supply chain snarls related to the swift economic rebound from the pandemic, as well as Russia’s invasion of Ukraine, for igniting inflation.
He said his administration will help ease price increases by shrinking the government’s budget deficit and by fostering competition in industries, like meatpacking, that are dominated by a few industry giants.
Republicans argue that Biden’s $1.9 trillion spending package last March overheated the economy by flooding it with stimulus checks, enhanced unemployment aid and child tax credit payments.
‘Inflation is out of control with another gas price record hit today, yet Biden continues to lie to Americans and refuses to take responsibility for his failed agenda,’ said Republican National Committee Chairwoman Ronna McDaniel in a statement responding to the latest report.
‘Biden and Democrats’ reckless spending created the highest inflation in 40 years, and Americans are paying the price,’ she added. ‘Skyrocketing prices, Biden’s gas hike, and the deteriorating economy are on the ballot in November, and voters know Biden and Democrats are to blame.’
On Wednesday, Biden planned to visit a family farm in Illinois as he seeks to highlight how Russia’s war on Ukraine has affected global food prices.
The visit comes as the White House is struggling to rein in inflation on many fronts, from gasoline to food. U.S. gas prices hit record highs on Tuesday, and Russia’s invasion of Ukraine in late February dramatically worsened the outlook for food prices.
The U.N. food agency recently said global food prices hit an all-time record in February and again in March. Russia and Ukraine account for nearly a third of global wheat and barley, and two-thirds of the world’s exports of sunflower oil used for cooking.
‘He’s going to talk about the support we need to continue to give to farmers to help continue to produce more and more domestically to help address the food shortages that we’re seeing in some parts of the world,’ White House press secretary Jen Psaki said on Tuesday.
Biden will announce actions aimed at helping U.S. farmers boost food production and lower food prices, including doubling funding for domestic fertilizer production and increasing technical help for nutrient management tools, the White House said.
The administration will also increase the number of counties eligible for double cropping insurance for planting a second crop on the same land in the same year, it said.
Biden will also speak at the 40th International Brotherhood of Electrical Workers International Convention. The convention was originally scheduled for last August and delayed because of the COVID-19 pandemic.
Biden is expected to speak about his support for unions, infrastructure investments and the energy industry, Psaki said.