U.S. inflation chilled slightly in April, coming in at an annual rate of 8.3%, according to a Wednesday U.S. Department of Labor report, though many consumer categories, including basic necessities, still saw double-digit increases over a year ago.
The average rate for April was below the 8.5% year-over-year surge in March, which was the highest rate since 1981.
While an April dip in gasoline prices helped bring down the overall inflation rate, prices at the pump have been on the rise in May and, according to a Wednesday AAA report, the average price per gallon of regular across the U.S. was at an all-time high of $4.40.
Mountain West states, which include Utah, continued to have the highest regional inflation in the country with the average prices of goods and services rising 9.8% in April, down from March’s 10.4% uptick.
The Labor Department report noted increases in the indexes for shelter, food, airline fares and new vehicles were the largest contributors to the seasonally adjusted all items increase. The food index rose 0.9% over the month as the food at home index rose 1%. The energy index declined in April after rising in recent months. The index for gasoline fell 6.1% over the month, offsetting increases in the indexes for natural gas and electricity.
Grocery costs were up 10.8% over a year ago, gasoline costs on average were up 43.6% over April 2021, and costs related to shelter rose 5.1% in the last year.
Prices of new and used vehicles also continue to surge, up 13.2% and 22.2%, respectively.
Beyond the financial strain for households, inflation is posing a serious political problem for President Joe Biden and congressional Democrats in the midterm election season, with Republicans arguing Biden’s $1.9 trillion financial support package last March overheated the economy by flooding it with stimulus checks, enhanced unemployment aid and child tax credit payments.
On Tuesday, Biden sought to take the initiative and declared inflation “the No. 1 problem facing families today” and “my top domestic priority.”
Biden blamed chronic supply chain snarls related to the swift economic rebound from the pandemic, as well as Russia’s invasion of Ukraine, for igniting inflation. He said his administration will help ease price increases by shrinking the government’s budget deficit and by fostering competition in industries, like meatpacking, that are dominated by a few industry giants.
Still, new disruptions overseas or other unforeseen problems could always send U.S. inflation back up to new highs. If the European Union decides, for example, to cut off Russian oil, gas prices in the United States would likely accelerate. China’s COVID-19 lockdowns are worsening supply problems and hurting growth in the world’s second-biggest economy.
The unexpected persistence of high inflation has caused the Federal Reserve to embark on what may become its fastest series of interest rate increases in 33 years. Last week, the Fed raised its benchmark short-term rate by a half-point, its steepest increase in two decades. And Powell signaled that more such sharp rate hikes are coming.
The Fed is seeking to pull off the notoriously difficult — and risky — task of cooling the economy enough to slow inflation without causing a recession. Economists say such an outcome is possible but unlikely with inflation this high.
Since last summer, Utahns registered increasing concerns over the wide-ranging price hikes on goods and services, sentiment traced by monthly polling conducted by the Deseret News in partnership with the Hinckley Institute of Politics.
In a statewide poll conducted by Dan Jones & Associates from March 9-21 of 804 registered Utah voters, an overwhelming majority of respondents, 93%, said they were very or somewhat concerned about inflation, a number that matched what pollsters heard from Utahns in a February survey.
Poll participants also logged their worries about household earnings simply not keeping up with rising costs, and most said they haven’t seen any meaningful increases in their paychecks over the past year.
While 38% of respondents said they’d seen a raise in the past 12 months, 62% said their income has stayed the same, and 75% of those polled said their pay was simply not keeping up with inflation.
The same March survey also asked Utahns who they thought bore responsibility for the rise in inflation. While respondents were nearly united in expressing their concerns over wide-ranging price increases, they gave more varied answers to the question about who is to blame.
Not surprisingly, perhaps, partisanship played a role in the survey of 804 registered voters conducted March 9-21. A plurality of respondents, 33%, pointed the finger at the Democratic Party when asked “who or what is to blame for inflation.”
Republicans fared much better, earning only 6% in the blame game, while the Federal Reserve was seen as slightly more liable at 8%. The prices and policies of corporate America were the source of inflation for 17% of poll participants, and 23% believed higher costs can be traced back to the economic fallout from COVID-19.
The poll results have a margin of error of plus or minus 3.45 percentage points.
Contributing: Associated Press