US inflation slowed down to 8.3% in April as gasoline prices eased

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US inflation slowed down to 8.3% in April as gasoline prices eased

US inflation slowed down to 8.3% in April as gasoline prices eased
Image source: © Wisconsinart | Megapixl.com

Highlights:

  • April CPI slowed down to 8.3% YoY for the first time since August.
  • Gasoline prices slid 6.1% in the month after soaring 18.3% in March.
  • Airline fares skyrocketed 18.6% MoM, propelled by rising demand and high jet fuel prices.

US inflation slowed down at an annual rate of 8.3% in April as gasoline prices eased from their record highs in the previous month. However, the consumer price index (CPI) saw a month-on-month increase of 0.3% in April from a 1.2% surge in the CPI in the previous month.

Gasoline prices slid 6.1% in the month after soaring 18.3% in March, suggesting that inflation may have reached its peak. In March, the CPI rose at an annual pace of 8.5%, the largest year-on-year gain since December 1981.

The prices of used vehicles rose 22.7% YoY in April, down from a 35.3% rise in the previous month. New vehicle prices also rose 13.2% YoY, the largest annual increase since 1949.

The month-on-month CPI growth of 0.3% in April was the slowest pace of increase since August 2021.

Experts believe that although inflation is here to stay, markets can at least heave a sigh of relief that it isn’t getting worse.

The Fed can still maintain the status quo of its 50bp rate hikes in June and July and not go into overdrive to contain inflation, they said.

While gasoline prices dropped, food prices soared 0.9%. Dairy and related products surged by 2.5%, the highest since 2007.

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US inflation slowed down to 8.3% in April as gasoline prices eased© Djbobus | Megapixl.com

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Gasoline prices are likely to rise again

The deceleration in the monthly CPI growth rate is seen as a temporary reprieve as gasoline prices are likely to soar again. On Wednesday, US gasoline prices averaged US$4.404 per gallon.

The Russia-Ukraine war has been the main reason driving up the gasoline and goods prices. Even as the economies tried to recover from the pandemic, the Russian invasion of Ukraine came as a double whammy, further straining the global supply chain.

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Wednesday’s CPI data also showed that airline fares skyrocketed 18.6% MoM, propelled by rising demand and high jet fuel prices. Hotel prices also shot up, along with recreational and household furnishings.

Apparel prices dropped 0.8% after six months of rising on the trot while people paid higher prices on medicines and hospitals.

Communication services costs fell for a third straight month, while prices of used cars and trucks also declined 0.4% month-on-month.

Bottom line:

There is a mixed reaction to inflation after the CPI report on Wednesday. People are happy that the numbers declined from last month, but at the same time, they are a notch higher than expected.

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