Inflation jumped to 8.3% in April from a year ago, remaining near 40-year highs

Inflation rose again in April, continuing a rise that has pushed consumers to the brink and threatens economic expansion, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a broad measure of the prices of goods and services, rose 8.3% from a year ago, beating the Dow Jones estimate for a gain of 8.1 %. This represented a slight easing from the March peak, but remained close to the highest level since the summer of 1982.

Stripping out volatile food and energy prices, the so-called core CPI rose another 6.2% against expectations of a 6% gain, dimming hopes that inflation has peaked in March.

Price increases also meant that workers continued to lose ground. Inflation-adjusted real wages fell 0.1% over the month despite a nominal 0.3% increase in the average hourly wage. Over the past year, real earnings have fallen 2.6% even though average hourly earnings have increased 5.5%.

Inflation has been the biggest threat to a recovery that began at the start of the pandemic and saw the economy in 2021 reach its highest level of single-year growth since 1984. Rising prices at the pump and in groceries has been a problem, but inflation has spread beyond those two areas into housing, auto sales and a host of other areas.

Federal Reserve officials have responded to the problem with two interest rate hikes so far this year and promising more until inflation returns to the central bank’s 2% target. However, Wednesday’s data shows the Fed has a lot of work ahead of it.

Month-over-month gains were also better than expected – 0.3% on the headline CPI vs. 0.2% estimated and a 0.6% increase for the core, against the outlook for a gain of 0.4%.

These readings came even though energy prices fell 2.7% for the month, including a 6.1% decline for gasoline. The BLS food index rose 0.9% in April, countering the deceleration in energy. Year-over-year, energy costs rose another 30.3%, while food rose 9.4%, according to unadjusted data.

The continued rise in housing prices adds to concerns.

The housing index, which is about a third of the CPI’s weighting, rose another 0.5%, in line with its rise in the previous two months, and rose 5.1% on a annual, its fastest gain since April 1991.

Stock futures reacted negatively to the report, turning negative after being positive earlier in the morning. Yields on government bonds rose, pushing the yield on the benchmark 10-year Treasury to nearly 3.03%.

Markets were looking for signs that the CPI reading of 8.5% in March would hit the peak of pandemic-era inflation.

However, the April report showed that “this is another surprise on the upside to inflation and suggests that the deceleration is going to be extremely slow,” said Seema Shah, chief strategist at Principal Global. investors.

Auto sales were also a big contributor to inflation, as supply chain issues, particularly with semiconductors vital to vehicle operating systems, drove up prices. Used vehicle prices fell 0.4% over the month, but new vehicle prices rose 1.1%. Prices have increased by 22.7% and 13.2% respectively for the two categories over the past year.

April also saw sharp price increases in some food zones. Chicken rose 3.4% and eggs jumped 10.3% amid a bird flu scare, while bacon rose 2.9% and breakfast cereals rose 2.4%. Ham prices fell 4.2%.

Airline fares continued to climb as more people fly amid increased business travel and vacations. Prices increased by 18.6% over the month and are up, according to non-seasonally adjusted data, by 33.3% compared to the past year.

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