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.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
