Inflation remained uncomfortably strong in April, signaling that efforts to combat it may not be enough to address its flight.
On Wednesday, the U.S. Bureau of Labor Statistics released the latest results of the Consumer Price Index (CPI), which showed headline inflation up 8.3% last year as of April. This increase exceeded economists’ expectations of around 8.1% and remained close to the highest levels recorded in August 1982.
Much of the increase was driven by spikes in food, energy, shelter and vehicle prices. According to the BLS, the cost of food rose 9.4% last year, while prices for energy products rose 30.3%. Fuel prices increased by 80.5% last year.
Energy prices, especially for gas, have been a major driver of inflation in the last two months. According to the American Automobile Association (AAA), the average price for a gallon of gasoline is $4.40 nationally, but goes up to $5.84 in California, where some counties report paying $6 per gallon.
Despite the dire figure, April’s CPI figures were slightly lower than in March, where they rose 8.5% year-on-year. Like the latest figures, gas and fuel prices were the main drivers of hyperinflation, with the latter showing a staggering 70.1% increase.
These latest data follow the Federal Reserve’s decision last week to raise interest rates to counter inflation. On May 4, the Fed raised interest rates by half a point, dealing a serious blow to markets that were still sucked at the start of the week.
In the weeks leading up to the rate hike, analysts predict the Fed is likely to initiate a larger rate hike, but have warned it could push the economy closer to recession later in the year.
Federal Reserve Chairman Jerome Powell acknowledged that the road ahead is fraught with recession risks and variables beyond the Fed’s ability to control.
“It won’t be easy.
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