Inflation drops slightly, but some categories still see increases.

Consumer Price Index Rises 4.9% in April 2023

The latest report from the Bureau of Labor Statistics reveals that the consumer price index rose 4.9% between April 2022 and April 2023, marking a continued decline from elevated inflation. Despite the slight decrease from the 5.0% headline inflation recorded in March 2023, food and electricity prices have increased 7.7% and 8.4%, respectively, between April 2022 and April 2023.

What the Latest Inflation Data Means for You

Food prices were flat and energy prices rose 0.6%, while shelter prices, one of the largest contributors to the overall month-to-month increase, rose 0.4%. The month-to-month increase of 0.4% was in line with analyst expectations, while core inflation, which factors out the more volatile food and energy categories, also rose 0.4% and is in line with expectations.

Officials at the Federal Reserve have increased the target federal funds rate in an effort to slow price level increases, a policy regime that raises the cost of borrowing funds for consumers and businesses, thereby lowering inflation, but dampening overall economic activity. Federal Reserve policymakers introduced a quarter-point rate hike last week, marking a continued slowdown from previous rate hikes and reflecting caution as the financial sector reels from the collapse of three medium-sized banks.

What President Biden is Doing to Combat Inflation

President Joe Biden has repeatedly asserted that his policies are responsible for easing price levels in some product categories, even as inflation remains between three times and four times higher than levels seen at the start of his administration. “We are making progress in the fight against inflation,” he commented in one statement released in April. “The fight against inflation isn’t over, and every day my administration is working to give families more breathing room.”

What the Future Holds

Economic growth in the United States slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters, according to an advance estimate released last week by the Bureau of Economic Analysis. Federal Reserve officials have also concluded that the present instability in the financial system warrants a recession forecast for the latter portion of the year, followed by a predicted recovery over the subsequent two years.

Takeaways

• The consumer price index rose 4.9% between April 2022 and April 2023, marking a continued decline from elevated inflation.
• Food and electricity prices have increased 7.7% and 8.4%, respectively, between April 2022 and April 2023.
• Officials at the Federal Reserve have increased the target federal funds rate in an effort to slow price level increases.
• President Joe Biden is working to combat inflation and give families more breathing room.
• Federal Reserve officials predict a recession forecast for the latter portion of the year, followed by a predicted recovery over the subsequent two years.