Inflation slowed down a little in the United States in April, but brought only a slight relief, as the rise in prices remains strong and affects the purchasing power of Americans.
The slowdown is indeed tenuous: in April, year on year, inflation stood at 8.3% – more than expected –, against 8.5% in March, according to the consumer price index ( CPI) released Wednesday by the Labor Department. And the rise in prices remains close to the 40-year high it recorded last month. Food prices alone experienced their strongest rise over one year since April 1981 (+9.4%).
Good news
The good news, however, is that this slowdown is the first in eight months. It could signal the start of a slow decline in inflation after peaking in March, when price inflation was at its highest since December 1981.
“Inflation may have peaked, but the slowdown through the end of the year will be anything but rapid,” warns Gregory Daco, chief economist for EY-Parthenon.
Joe Biden, since the start of the week, has been trying to convince Americans that the White House is doing everything it can to fight this high inflation, which is weighing on his popularity as the midterm elections approach. “While it is heartening to see that annual inflation moderated in April, the fact remains that inflation is at an unacceptable level. As I said yesterday, inflation is a challenge for families across the country, and getting it down is my top economic priority,” he said in a statement.
Over one month alone, the slowdown in inflation is much more marked than over one year: it fell to 0.3%, against 1.2% in March compared to February. Main reason: gasoline prices, which had soared in March because of the war in Ukraine, fell by 6.1%.
“Although the April figures suggest that a peak may have been reached”, the recent record high in gasoline prices at the pump “shows that a risk remains”, warns Kathy Bostjancic, chief economist for Oxford Economics , in a footnote. Gasoline prices at the pump hit new highs in quick succession this week, at $4.40 per gallon (3.78 liters) on Wednesday. A higher price since 2000, when the American Automobile Association started these statistics.
And “the closures in China linked to COVID and the continuation of the Russian-Ukrainian war are putting additional pressure on already strained supply chains”, further notes the economist.
Excluding energy and food prices, so-called core inflation accelerated over one month, to 0.6% against 0.3% in March. But it slowed down over one year, to 6.2% against 6.5%.
Scalded Wall Street
The New York Stock Exchange fell again on Wednesday, uneasy with the latest CPI data, which opens the door to an even more marked tightening of US monetary policy. The Dow Jones dropped 1%, and the broader S&P 500 index 1.7%, but it was above all the Nasdaq index that was heckled, yielding 3.2%.
The tech heavyweights had one of their worst days of the year, with Apple losing 5.2%, Microsoft 3.3%, Tesla 8.3% and Meta (ex-Facebook) 4.5%. In one week, Tesla saw its capitalization melt by almost 23%.
Since its peak at the end of November, the barometer of technology stocks has melted by almost 30%.
On the one hand, a positive reading, that of Cliff Hodge, of Cornerstone Wealth, concluding that “March will have been a peak” for inflation, which has begun “a slight deceleration”. “Recession fears are exaggerated”, continued the analyst, for whom “the consumer remains solid and continues to spend”.
The other part of the observers saw in this publication an alarming signal. “Underlying inflation [hors énergie et alimentation] reached its fastest pace since January,” reacted Charlie Ripley of Allianz Investment Management, for whom this “makes the job” of the US central bank (Fed) “more delicate”.
“This persistent inflation will push the Fed to [remonter les taux] more aggressively,” anticipated Will Compernolle of FHN Financial. “It could even lead to [membres de la Fed] to plead for an increase of 0.75 percentage point in June, ”he said, a prospect which had however been dismissed by the president of the institution, Jerome Powell, last week.