Inflation across the US eased slightly last month as concerns about the cost of living loomed over the battle between Joe Biden and Donald Trump for the White House.
The closely watched consumer price index (CPI) rose at an annual rate of 3.4% in April, down from an annual pace of 3.5% the previous month.
The White House released a low-key statement after the figures were released. “Fighting inflation and lowering costs is my top economic priority,” said Biden. “I know many families are struggling, and that even though we’ve made progress we have a lot more to do.”
Policymakers have been surprised by stubborn price growth, which they hope to bring down to 2%.
The Federal Reserve has pushed interest rates to a two-decade high to tamp down inflation and had been expected to start cutting them this year. But price gains have remained higher than the central bank’s target and hopes of a rate cut have faded.
“We did not expect this to be a smooth road,” Jerome Powell, the Federal Reserve chair, said before the news on Tuesday, “but these [inflation readings] were higher than I think anybody expected.”
The “core” CPI, which strips out volatile food and energy prices, rose 0.3% in April, down from 0.4% in the previous three months, according to the Bureau of Labor Statistics. The annual rate of core CPI was 3.6% in April, its lowest rate since April 2021.
Rising housing and fuel costs were the two biggest factors behind April’s price increases. “The index for shelter rose in April, as did the index for gasoline. Combined, these two indexes contributed over 70% of the monthly increase in the index for all items,” the Bureau of Labor Statistics reported.
Food prices were flat and egg prices dropped sharply – 7.3% – over the month.
“While on the surface it is positive to see inflation fall from the previous month, looking at the trend over the past 12 months provides a different picture. Inflation has been bouncing around the 3%-4% range for a considerable period of time now, and this is now arguably singlehandedly preventing the Federal Reserve from pushing the button on rate cuts,” said Lindsay James, investment strategist at Quilter Investors.
Inflation has fallen sharply since peaking at 9.1% – its highest level in a generation – almost two years ago.
But the pressure exerted by elevated prices on household budgets nationwide has become a key flashpoint in the run-up to November’s presidential election, with a string of polls indicating that the economy is a top issue for voters.
Biden has hit back at polls that suggest many Americans question his handling of the economy, labeling them as “wrong” last week. “We’ve already turned it around,” he told CNN. In the interview, Biden also pointed to the robust growth of the US labor market, which has added hundreds of thousands of jobs this year.
Trump is, nevertheless, seeking to cast Biden as “the destroyer of America’s jobs”, claiming the president’s policies have fueled “runaway” inflation.
