Inflation resumed its downward trajectory in April in the United States, after three months of rebound, good news for President Joe Biden, the rise in prices being a crucial issue in his duel with Donald Trump for the election presidential.
Inflation slowed in April for the first time since January, to 3.4% over one year against 3.5% in March, according to the CPI index on which pensions are indexed, published Wednesday by the Labor Department.
This development is in line with analysts’ expectations, according to the Market Watch consensus.
And even better: so-called core inflation, which excludes volatile food and energy prices, fell to 3.6% year-on-year, its lowest level since April 2021 — when inflation had started to climb.
The rise in consumer prices was also less strong over just one month, at 0.3% compared to 0.4% the previous month. The increase in prices is due in particular to housing and gasoline at the pump, which represent more than 70% of the increase.
Inflation is at the heart of the electoral campaign, as it has reduced the purchasing power of Americans.
President Joe Biden, campaigning for his re-election, welcomed this slowdown, but stressed that “although we have made progress, we still have much to do,” in a statement from the White House.
He also warned that the Republicans’ agenda would “cause inflation to skyrocket.”
“Bidenomics is a disaster”
The Republican opposition and its presidential candidate, Donald Trump, largely blame the Democratic president for the price surge.
Bidenomics – the nickname given to Joe Biden’s economic policy – “is a complete disaster”, reacted in a press release the press manager of Mr. Trump’s electoral campaign, Karoline Leavitt.
“When President Trump returns to the White House, he will reinstate his America First agenda of low taxes, lower prices, and higher wages to improve living environment for all Americans,” she assured.
The two men will oppose each other on June 27 during a debate.
“Price pressures remain high but are moving in the right direction,” notes Rubeela Farooqi, chief economist for High Frequency Economics.
Inflation started to rise again at the start of 2024, after having slowed significantly in the last months of 2023.
For consumers, slowing inflation means improving purchasing power. But also that the American Federal Reserve (Fed) will be more inclined to lower its rates, when it considers that the rise in prices has slowed down sustainably.
This will have the effect of making credit less expensive for households, who will be able to more easily buy housing or a car, for example.
” Little step “
The drop in inflation in April “is a small step in the right direction,” commented Ryan Sweet, economist for Oxford Economics, who still expects a first rate cut from the Fed in September, then another in December.
The Fed wants to reduce inflation to 2%, and to do so favors another measure, the PCE index, which also accelerated in March, to 2.7% over one year.
Fed Chairman Jerome Powell estimated Tuesday that the persistence of still high inflation had reduced his level of confidence in the lasting decline in inflation.
“The numbers have been higher than anyone anticipated,” he said, and “we need to be more patient and let the restrictive policy take effect.”
However, he does not consider it necessary to start raising rates again.
The Fed had, on 1er May at the end of its meeting, kept its interest rates unchanged, at the highest in more than twenty years, between 5.25% and 5.50%, in order to prevent prices from continuing to soar.
The evolution of inflation in the United States contrasts with the euro zone, where it has slowed significantly, and where a rate cut by the European Central Bank (ECB) in June now seems almost certain.