New figures suggest inflation could remain elevated for the foreseeable future.
US consumer prices rose more than forecast in April, building on economy-wide inflationary pressures that are weighing on households and spurring the Federal Reserve to raise interest rates aggressively.
The core consumer price index, which excludes food and energy, increased 0.6% from a month earlier and 6.2% from April 2021, according to Labor Department data released Wednesday. The broader CPI rose 0.3% from the prior month and 8.3% on an annual basis, still among the highest readings in decades.
Some of the largest contributer's to the monthly increase included shelter, food, airfares and new vehicles.
The core CPI was projected to rise 0.4% from a month earlier, while the headline gauge was seen climbing 0.2%, according to the median estimates in a Bloomberg survey of economists.
While the latest report shows that US inflation has likely peaked, the figures underscore the breadth of price increases in the economy and, when combined with firm wage growth, suggest inflation will remain elevated for quite some time.
Despite the Fed raising interest rates, including the biggest rate hike since 2000 last week, global headwinds like China’s lockdowns and resilient services’ demand may mean a slow road to the central bank’s 2% goal.
Fed Chair Jerome Powell signaled last week that officials are open to several half-point increases in the central bank’s benchmark rate in the months ahead. The CPI will help shape estimates for the April personal consumption expenditures price index, the Fed’s preferred inflation gauge, which will be released on May 27.
Inflation has put President Joe Biden and Democrats on their heels this year, threatening their thin congressional majorities despite a robust job market and resilient consumer spending.
A key expectation for a moderation in inflation this year hinges on slowdown in goods prices as Americans shift their discretionary income to activities like travel and dining out. Goods inflation declined while services costs increased by the most since 2001 on a monthly basis.