US inflation remained near its 40-year high since December, but cooled slightly from 8.5% in March to 8.3% in April compared to last year. This allowed a glimpse of a nascent hope that the rise in prices may begin to temper in key issues such as energy, food or housing, where a stagnation was noted.
No spectacular news was expected from last month's data, although economists were hopeful of seeing the first signs that inflation is beginning to tame. This has happened for the first time in eight months. Economists believe, however, that returning to normalcy will take a long time.
Data from the Statistics Office indicates that prices grew by 0.3% in April, a notable improvement compared to the previous month, which rose by 1.2%.
The rise in product prices is attributed to the war in Ukraine after the Russian invasion, which is reflected in the higher cost of oil; problems in the supply chain, an issue that drags on as a legacy of the measures against the pandemic and the closures recently decreed in China; and an increase in demand since consumption remains high thanks to an average wage increase that has not been seen in decades, with a very strong labor market.
But, in a sense, things have only gotten worse so far in May. The national average of the gallon of gasoline (3.8 liters) rose to the historical record of 4.37 dollars this Tuesday, which is above the previous ceiling of 4.33 dollars of last March 11. Above four dollars is a red line that is reflected in the discouragement of consumers. California, Hawaii and Nevada exceeded $5 a gallon.
This only adds pressure to inflation and fuels fears of a recession. The price of fuel has shot up 25% since the start of the Russian invasion of Ukraine and is causing instability in the stock markets.
Analysts maintain that the cure for rising prices is the rise in interest rates. This makes it more expensive for businesses and citizens to borrow money and cuts their spending. The Federal Reserve (Fed) made its second consecutive increase last week, this time with half a point, the highest rise since 2000. At least another five increases are expected for this 2022 and some more are planned in 2023.
But this measure to slow down the economy can encourage a recession, experts point out, although Fed Chairman Jerome Powell expressed his confidence that this point will not be reached. He called it "soft landing". Not a few believe that the US central bank, including some of its governors, was too slow to respond to rapid inflation in 2021.
This circumstance is noticeable at the tables of American homes, which do not hide their anxiety about the escalation in food, meat, gasoline or rent prices, to the point of becoming the greatest concern of citizens. The surveys show a weariness due to the shortage of supplies, with the latest example of the lack of infant formula in pharmacies. There are also headaches due to the fear that retirement fund savings will fall victim to the roller coaster ride that Wall Street has become.
President Joe Biden appeared this Tuesday and accused the usual suspects: Putin's war, the legacy of the pandemic and the Republicans' obstruction policy, which, according to their version, "they want to solve this by raising your taxes and lowering income ". The problem is that Biden does not control any of these three culprits.