Inflation rises 4.9% from year ago

In April, a widely observed indicator of inflation recorded an increase, although the rate of growth provided some optimism that living costs may taper off later in the year.

According to a report from the Labor Department on Wednesday, the consumer price index (CPI), which measures the cost of a wide range of goods and services, rose by 0.4% for the month, aligning with the estimate provided by Dow Jones.

However, this resulted in an annual increase of 4.9%, slightly below the estimated 5% and the slowest annual pace since April 2021, CNBC reported.

When excluding the volatile food and energy categories, the core CPI experienced a monthly increase of 0.4% and a year-on-year increase of 5.5%, both in line with expectations.

The rise in the index was primarily driven by increases in shelter, gasoline, and used vehicles, which were partially offset by declines in fuel oil, new vehicles, and food prices at home.

The market responded positively to this news, as futures turned positive and Treasury yields declined.

Despite the Federal Reserve’s attempts to curb inflation, it has remained stubbornly persistent. Beginning in March 2022, the central bank implemented a series of ten consecutive interest rate hikes, amounting to a cumulative increase of 5 percentage points.

As a result, benchmark borrowing rates reached their highest level in nearly 16 years, as reported by CNBC.

Although the consumer price index (CPI) has shown a significant decrease since reaching a peak of approximately 9% in June 2022, inflation has continued to surpass the Federal Reserve’s annual target of 2%.

As Fed officials deliberate on their next steps regarding interest rates, the report offers a mix of positive and negative news on the inflation front.

Written by staff