IInflation eased slightly to 8.3% for the 12 months ending in April, according to the consumer price index, the first decline in eight months, but still at a higher rate than economists expected.
Long-awaited figures released by the Bureau of Labor Statistics on Tuesday revealed that inflation is still high despite interest rate hikes by the Federal Reserve and is the worst it has seen since February 1982 when the Great Inflation that helped bring President Ronald Reagan to power. .
MANUFACTURERS UNDER DOLLAR VALUE PRESSURE AS FED CLUBS IN INFLATION
Soaring inflation has eaten away at President Joe Biden’s approval ratings as he and Democrats approach midterm elections. Consumer prices have risen rapidly since last August, especially for basics like food and gasoline. Typical weekly grocery bills, for example, have increased by more than $30.
The Federal Reserve announced in March that it would raise its interest rate target by a quarter of a percentage point, the first rate hike since 2018, in a bid to rein in rising prices, although some economists and many Republicans say the central bank should have acted sooner to reverse its pandemic emergency measures.
This month, the Federal Open Market Committee announced that it would raise its interest rate target by half a percentage point. The central bank typically raises rates by just a quarter of a percentage point, so the move equals two rate hikes and once and shows that the Fed is concerned about rising prices.
The central bank has also signaled that it may end up making further half-point hikes at its upcoming meetings in June and July, meaning that all signs point to interest rates continuing to rise. over the next year.
The war in Ukraine further adds to the inflationary flames. The conflict has sent energy prices skyrocketing as Russia is one of the world’s largest producers of oil and natural gas.
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The average price of gasoline in the United States hit a record high of $4.37 a gallon on Tuesday, according to AAA.
There are also fears that the Fed’s aggressive action to raise interest rates could push the economy into a recession, a prospect that doesn’t bode well for Biden and Democrats who have run on the strong job market. and the country’s ultra-low unemployment.
Original location: Inflation fell to 8.3% year on year in April, still more than expected
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