Inflation was 8.3% in April, and that might actually be good news. For the first time in seven months, the figure was below what it had been the previous month. Core prices – those that exclude food and energy – rose 0.6%, however, doubling the figure from March. That is thanks in large part to the return of travel and high costs in that sector as demand is sky-high.
In terms of items that are volatile even in “normal” times, grocery prices are up nearly 11% compared to a year ago, and gas is 44% more expensive than it was a year ago, though that is down 6% from March.
President Joe Biden declared inflation “the No. 1 problem facing families today” and “my top domestic priority.”
Continuing lockdowns in China related to COVID outbreaks represent a double-edged sword in pricing levels. The supply chain disruptions they are causing have been a major contributor to high prices on goods shipped from the world’s No. 1 manufacturer, but the lockdowns are also decreasing demand for oil, which in turn has lowered prices. When the lockdowns end and Chinese production ramps up, oil prices will increase faster than supply chain issues get resolved. And if the European Union cuts off Russian oil imports because the latter’s invasion of Ukraine, that will further drive prices up.
Biden said fostering competition in industries, such as meatpacking, that are dominated by a few major corporations, would help lower inflation. Biden is also mulling whether to end the tariffs on goods imported from China that the Trump administration imposed.
Inflation also showed signs of decreasing last August and September before accelerating once again, prompting the Federal Reserve to explore raising interest rates, which it did once again at its meetings last week, announcing a hike of 50 basis points.