Clearance sale signs are displayed at a retail store in Downers Grove, Ill., Wednesday, April 26, 2023. On Wednesday, the Labor Department reports on U.S. consumer prices for April. (AP Photo/Nam Y. Huh)
By Christopher Rugaber
Consumer prices in the United States rose again in April, and measures of underlying inflation stayed high, suggesting that rising costs could persist for months to come.
Prices rose 0.4% from March to April, the government said Wednesday, up from 0.1% from February to March. Compared with a year earlier, prices climbed 4.9%, down slightly from March’s year-over-year increase.
The nation's inflation rate has steadily cooled since peaking at 9.1% last June but remains far above the Federal Reserve's 2% target rate.
The Fed is paying particular attention to so-called core prices, which exclude volatile food and energy costs and are regarded as a better gauge of longer-term inflation trends. Core prices rose 0.4% from March to April, the same as from February to March. It was the fifth straight month that core prices have risen by 0.4% or more. Increases at that pace are far above the Fed’s 2% target.
Compared with a year ago, core prices rose 5.5%, just below a yearly increase of 5.6% in March.
Economists say the overall slowdown in U.S. inflation since last summer might turn out to have been a relatively easy phase of the nation’s drive to conquer inflation.
The supply chain snarls that left many grocery shelves bare and delayed the delivery of furniture, cars, electronics and numerous other goods have been resolved. Gas prices have dropped since topping $5 a gallon nationally after Russia’s invasion of Ukraine, though they rose again in April after OPEC agreed to cut oil output.
Yet unlike goods prices, the costs of services — from restaurant meals to auto insurance, dental care to education — are still surging. A major reason is that companies have had to raise pay in those industries to find and retain workers. Federal Reserve officials say that fast-rising wages, while good for workers, have contributed to higher costs in services industries because labor makes up a significant portion of those industries’ expenses.
Last week, the Fed signaled that it might pause its rate increases, after imposing 10 straight hikes, so that it could take time to assess how higher borrowing costs have affected the economy. The full economic impact of the hikes, though, might not become evident for months.
For more than two years, high inflation has been a significant burden for America’s consumers, a threat to the economy and a frustrating challenge for the Fed. The central bank has raised its key interest rate by a substantial 5 percentage points since March 2022 to try to drive inflation back down to its 2% target.
Besides making borrowing far more expensive for consumers and businesses, those higher rates have contributed to the collapse of three large banks in the past two months and to a likely pullback in bank lending. The result could be a further weakening of the economy.
Even more ominously, the government’s debt ceiling may be breached by early June, and Republicans in Congress are refusing to raise the cap unless President Joe Biden and congressional Democrats agree to sharp spending cuts. If the debt ceiling isn’t raised in time, the nation would default on its debt, a scenario that could ignite a global economic crisis. When they met last week, the Fed’s policymakers agreed to raise their benchmark rate by a quarter-point, to about 5.1% — the highest level in 16 years. The Fed’s rate hikes, which are intended to cool spending, growth and inflation, have led to higher costs for mortgages, auto loans and credit card and business borrowing.
Most economists think the rate hikes will, over time, have their intended effect. Yet most also worry that the hikes will weaken the economy so much as to tip it into a recession sometime this year.
The New York Times and President Donald Trump are fighting again. The news outlet said Wednesday it won't be deterred by Trump's “false and inflammatory language” from writing about the 79-year-old president's health. The Times has done a handful of stories on that topic recently, including an opinion column that said Trump is “starting to give President Joe Biden vibes.” In a Truth Social post, Trump said it might be treasonous for outlets like the Times to do “FAKE” reports about his health and "we should do something about it.” The Republican president already has a pending lawsuit against the newspaper for its past reports on his finances.
OpenAI has appointed Slack CEO Denise Dresser as its first chief of revenue. Dresser will oversee global revenue strategy and help businesses integrate AI into daily operations. OpenAI CEO Sam Altman recently emphasized improving ChatGPT, which now has over 800 million weekly users. Despite its success, OpenAI faces competition from companies like Google and concerns about profitability. The company earns money from premium ChatGPT subscriptions but hasn't ventured into advertising. Altman had recently announced delays in developing new products like AI agents and a personal assistant.
President Donald Trump says he will allow Nvidia to sell its H200 computer chip used in the development of artificial intelligence to “approved customers” in China. Trump said Monday on his social media site that he had informed China’s leader Xi Jinping and “President Xi responded positively!” There had been concerns about allowing advanced computer chips into China as it could help them to compete against the U.S. in building out AI capabilities. But there has also been a desire to develop the AI ecosystem with American companies such as chipmaker Nvidia.
U.S. sports betting is booming as NFL and college football fuel massive activity. BetMGM CEO Adam Greenblatt breaks down trends, growth, and what’s next.
President Donald Trump says a deal struck by Netflix last week to buy Warner Bros. Discovery “could be a problem” because of the size of the combined market share. The Republican president says he will be involved in the decision about whether federal regulators should approve the deal. Trump commented Sunday when he was asked about the deal as he walked the red carpet at the Kennedy Center Honors. The $72 billion deal would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.
Disney's changes to a program for disabled visitors are facing challenges in federal court and through a shareholder proposal. The Disability Access Service program, which allows disabled visitors to skip long lines, was overhauled last year. Disney now mostly limits the program to those with developmental disabilities like autism who have difficulty waiting in lines. The changes have sparked criticism from some disability advocates. A shareholder proposal submitted by disability advocates calls for an independent review of Disney's disability policies. Disney plans to block this proposal, claiming it's misleading. It's the latest struggle by Disney to accommodate disabled visitors while stopping past abuses by some theme park guests.
With a merger this big, creators, studios, and theaters all face uncertain futures. Here’s what experts are worried about and what good could come from it.
With disengagement rising and hybrid work shifting, 'Everybody Matters' author Bob Chapman explains why treating people well could define the future of work.
We sat down with Ali Furman, U.S. Consumer Markets Industry Leader at consulting firm PwC to ask what trends she garnered from the initial data this year.
