Annual rate has fallen sharply since hitting 40-year high last June but prices are still rising at a rate over twice the Fed’s target
The price of goods and services in the US remained stubbornly high in April, rising 4.9.% from a year ago, the labor department reported on Wednesday,
The annual rate of inflation has fallen sharply since hitting a 40-year high of 9.1% last June. April’s rise nearly matched the 5% rise recorded in March. It was the 10th consecutive month the rate has declined, but prices are still rising at a rate that is more than twice the Federal Reserve’s target rate of 2% a year.
The latest consumer price index (CPI) – a widely followed measure of the costs for goods and services in the US economy – showed prices rising 0.4% over the month, up from a 0.1% increase in March.
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Housing costs were the largest contributor to the monthly increase, followed by increases in the index for used cars and trucks and the index for gasoline. After stripping out the volatile prices of food and energy, prices rose 0.4% in April, as they did in March.
US inflation is markedly lower than in other countries. In the UK, inflation was 10.1% in March, the latest month for which figures are available. It was 6.9% in the Eurozone.
Despite the downward trend, the Fed has continued to aggressively raise rates as it seeks to tamp down price rises. Last week, it announced its 10th increase in rates since March last year. The Fed chair, Jerome Powell, indicated that the central bank may pause rate rises as it assesses the impact of those increases. But Powell has made clear rates are likely to remain high as long as inflation remains elevated.
On Tuesday, the New York Fed president, John Williams, warned that he expects inflation to remain an issue for some time despite the central bank’s actions.
“Because of the lag between policy actions and their effects, it will take time for the [Fed’s] actions to restore balance to the economy and return inflation to our 2% target,” he told the Economic Club of New York.
