Those stores will likely have to offer discounts to clear inventory in the coming months. Retailers have reported rising stockpiles of televisions, patio furniture and other goods for the home as consumers have shifted their spending more toward travel and services-related goods like luggage and restaurant gift cards. Other trends, however, suggest that core inflation may continue to slow in the coming months. The national average price of a gallon of gas has reached $4.60, according to AAA. Yet rising prices of gas and food, worsened by Russia’s invasion of Ukraine, will keep measures of inflation painfully high at least into the summer. The CPI jumped 8.3% in April from a year earlier, down from a 40-year high in March of 8.5%. Most economists say that while such an outcome is plausible, they doubt it can be achieved.Ī better-known inflation gauge, the consumer price index, earlier this month also reported a slowing in price gains. Powell has said the Fed is aiming for a "soft or soft-ish" landing, in which wages, consumer spending and growth slow, but the economy avoids a downturn. RELATED: As inflation soars, one-third of Americans are experiencing financial stress: Survey That concern has caused sharp drops in stock prices in the past two months, though markets have rallied this week. Indeed, goods prices, which drove inflation sharply higher last year, fell 0.2% from March to April after jumping in the previous month, while the cost of services rose 0.5%.Ĭhair Jerome Powell has pledged to keep ratcheting up the Fed's key short-term interest rate until inflation is "coming down in a clear and convincing way." Those rate hikes have spurred fears that the Fed, in its drive to slow borrowing and spending, may push the economy into a recession. The cost of such services as restaurant meals, plane tickets and hotel rooms is also rising. That trend could help cool inflation in the months ahead, though it's unclear by how much.
Surging demand for furniture, appliances and other goods, combined with supply chain snarls, began sending prices surging about a year ago.Ĭonsumers have shifted some of their spending from goods to services, like airline fares and entertainment tickets.
Still, inflation remains painfully high, and it's inflicting a heavy burden in particular on lower-income households, many of them Black or Hispanic.
Core prices climbed 4.9% in April from a year earlier, the first such drop since October 2020. The costs of clothing, appliances, and used cars also dropped from March to April.Įxcluding the volatile food and energy categories, so-called core prices rose 0.3% from March to April, matching the previous month's rise. Gas prices fell in April, holding down inflation, though they have since surged again. The April increase was the smallest since November 2020. As a result, healthy spending could continue for months.įriday's government report showed that on a month-to-month basis, prices rose 0.2% from March to April, down from the 0.9% increase from February to March. But overall, Americans built up an additional $2.5 trillion in savings since the pandemic, and economists calculate that that pile is eroding only slowly.
The savings rate fell to 4.4% last month, the lowest level since 2008. High inflation appears to be forcing consumers, on average, to save less. RELATED: Inflation hits rural towns: 'Groceries, utilities, gas, we’re seeing it everywhere'
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