Consumer inflation in the United States saw a slight decline last month, as prices rose 0.3% from March to April, down from the 0.4% increase the previous month. Despite this decrease, inflation still measured at 3.4% year-over-year, down from 3.5%. A measure of underlying inflation, excluding food and energy costs, also eased in April.
The elevated inflation readings in the first quarter had raised concerns about the worst bout of inflation in four decades not being under control. Federal Reserve Chair, Jerome Powell, dropped hints of interest rate cuts, stating that policymakers need “greater confidence” that inflation is decreasing to the 2% target level before lowering borrowing rates.
Reasons behind the continued high inflation figures include a re-acceleration in price growth and pandemic-related price distortions. Factors such as soaring auto insurance and rent costs have contributed to the persistent inflation. Powell specifically pointed out rising rents as a key factor in keeping inflation high.
Critics of President Biden, especially Republicans, have been quick to place blame on him for the high prices, which could potentially impact the upcoming presidential race. Economists remain divided on whether this high inflation is a temporary issue or a sign of ongoing price growth. Some point to strong demand in categories like restaurant meals and entertainment as factors driving the inflation.
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