WASHINGTON (AP) — Inflation slowed in April after seven months of relentless gains, a tentative sign that price increases may be peaking while still imposing a financial strain on American households.
Consumer prices jumped 8.3% last month from a year ago, the government said Wednesday. That was below the 8.5% year-over-year surge in March, which was the highest since 1981. On a monthly basis, prices rose 0.3% from March to April, the smallest increase in eight months.
Still, Wednesday’s report contained some cautionary signs that inflation may be becoming more entrenched. Excluding the volatile food and energy categories, so-called core prices jumped twice as much from March to April as they did the previous month. The increases were fueled by spiking prices for airline tickets, hotel rooms and new cars. Apartment rental costs also kept rising.
Those price jumps “make clear that there is still a long way to go before inflation returns to more acceptable levels,” said Eric Winograd, US economist at asset manager AB.
Even if it moderates, inflation will likely remain high well into 2023, economists say, leaving many Americans burdened by price increases that have outpaced pay raises. Especially hurt are lower-income and Black and Hispanic families, who are disproportionately squeezed by costlier food, gas and rent.
For now, a fallback in gas prices in April helped slow overall inflation. Nationally, average prices for a gallon of gas fell to as low as $4.10 in April, according to AAA, after spiking to $4.32 in March. But since then, gas prices have surged to a record $4.40 a gallon.
Grocery prices are still spiking, in part because Russia’s invasion of Ukraine has heightened the cost of wheat and other grains. Food prices rose 1% from March to April and nearly 11% from a year ago. That year-over-year increase is the biggest since 1980.
Turmoil overseas could accelerate inflation in the coming months. If the European Union, for example, decides to bar imports of Russian oil, world oil prices could rise. So could US gas prices. And China’s COVID lockdowns could worsen supply chain snarls.
In April, airfares soared a record 18.6%, the largest monthly increase since record-keeping began in 1963. Hotel prices jumped 1.7% from March to April.
Southwest Airlines said last month that it is expecting much higher revenue and profits this year as Americans flood the airports after postponing travel for two years. The company said its average fare soared 32% in the first three months of the year from the same period last year to $159.
There are signs that supply chains are improving for some goods. Wednesday’s report showed prices for appliances and clothing both fell 0.8%, while the cost of used cars dropped 0.4%, the third straight decline. Used cars and other goods drove much of the initial inflation spike last year as Americans stepped up spending after vaccines became widespread.
The escalation of consumer inflation has forced many Americans, particularly people with lower or fixed incomes, to reduce their spending on things like driving and grocery shopping. Among them is Patty Blackmon, who said she’s been driving to fewer of her grandchildren’s sports events since gas spiked to $5.89 in Las Vegas, where she lives.
To save money, Blackmon, 68, also hasn’t visited her hairdresser in 18 months. And she’s reconsidering her plan to drive this summer to visit relatives in Arkansas.
She was shocked recently, she said, to see a half-gallon of organic milk reach $6.
“Holy cow!” she thought. “How do parents give their kids milk?”
Blackmon has cut back on meat, and “a steak is almost out of the question,” she said. Instead, she is eating more salads and canned soups.
David Irby, 57, of Halifax, Virginia, said he is also cutting back on food and other expenses. A veteran who retired on disability in 2015 as a police officer, Irby said he has switched to chicken from beef, quit buying bacon and doesn’t buy junk food like his favorite treat, Cheetos.
Irby’s biggest worry is replacing his 22-year-old Ford truck, which isn’t reliable on long trips. A new one costs $50,00 while a five-year old used version is about $40,000.
“I don’t know how people on a fixed income can buy a vehicle now,” he said. “It takes me almost two years to make $40,000.”
Beyond the financial strain for households, inflation is posing a serious political problem for President Joe Biden and congressional Democrats in the midterm election season, with Republicans arguing that Biden’s $1.9 trillion financial support package last March overheated the economy by flooding it with stimulus checks, enhanced unemployment aid and child tax credit payments.
On Tuesday, Biden sought to take the initiative and declared inflation “the No. 1 problem facing families today” and “my top domestic priority.”
Previous signs that US inflation might be peaking didn’t last. Price increases decelerated last August and September, suggesting at the time that higher inflation might be temporary, as many economists — and officials at the Federal Reserve — had suggested. But prices shot up again in October, prompting Fed Chair Jerome Powell to start shifting policy toward higher rates.
Wednesday’s figures will keep the Fed on track to implement what may become its fastest series of interest rate increases in 33 years, economists said. Last week, the Fed raised its benchmark short-term rate by a half-point, its steepest increase in two decades. And Powell reported that more such sharp rate hikes are coming.
The Powell Fed is seeking to pull off the notoriously difficult — and risky — task of cooling the economy enough to slow inflation without causing a recession. Economists say such an outcome is possible but unlikely with inflation this high.
Associated Press Writer Anne D’Innocenzio in New York contributed to this report.