The Labor Department has revealed that the consumer price index, a crucial indicator of how much consumers pay for goods and services, increased by 4% last month compared to the same period in 2017.
The consumer price index (CPI) increased 0.1 percent from March to April.
On a yearly basis, the Core CPI, which excludes costs for food and energy, increased by 5.3 percent. Core prices increased by 0.4% from one month prior.
The data mostly matched predictions. For both headline and core inflation, economists had predicted 4.1 and 5.3 percent, respectively.
Both core and headline inflation for the year were lower than they had been a month before. On a yearly basis, the CPI increased by 4.9 percent and the core CPI by 5.5 percent in April. The CPI's rise from month to month decreased from 0.4 percent in April. Yet, the monthly rate of core inflation remains constant from the 0.4 percent in April.
Core inflation has been at or near 0.4 percent since December, as shown in the chart below, demonstrating the Fed is not doing much to reduce inflation. Inflation has increased over the past two months on an unrounded basis.
While slowing since it peaked at 8.9 percent in June 2022, inflation is still much above than the Fed's target rate of two percent. The personal consumption expenditure price index, which is calculated by the Commerce Department, is the measure of inflation that the Fed uses to set its target. The most recent data available shows that this index increased from 4.2 percent in March to 4.4 percent in April.
Inflation control has made slower progress than many Fed officials and economists had anticipated. By the end of the year, Fed officials predict that PCE inflation would decline to 3.5 percent, according to their most current set of forecasts, which were made public in March. This is expected to rise when the Fed issues a new summary of projections on Wednesday.
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