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US consumer prices rose 4.2% in April from a year ago, a bigger jump than economists had expected, fueling concerns about pressure inflationist.
He American inflation the reading draws special attention due to fears from some investors, economists and analysts that strong fiscal support, bottlenecks in supply and high demand caused by the rapid implementation of coronavirus vaccination they will lead to a risky rise in prices in the coming months.
Eliminating volatile energy and food costs, the CPI rose from 1.6% in March to 3% in April annually. Monthly, the overall CPI rose 0.8%, while the basic reading rose 0.9%.
4.2 per cent of the main figure marks the largest increase since 2008 and a significant jump compared to the 2.6 per cent annual increase posted in March.
However, Federal Reserve officials and senior economists in the Biden administration, including Treasury Secretary Janet Yellen, have said they expect any increase to be temporary.
High CPI rates are not only due to “side effects” because they are compared to last year’s falling inflation at the start of the coronavirus crisis, U.S. economic policymakers also believe that disinflationary pressures that have dominated the world economy in recent decades have not yielded.
Fed officials have become more tolerant of inflation, in part because consumer prices were so often below the central bank’s 2% target and even with a weak monetary policy. they have struggled to get it to increase.
“To the extent that supply chain congestion and other reopening frictions are transient, they are unlikely to generate persistently higher inflation on their own,” Lael Brainard, said a Fed governor on Tuesday.
“A persistent material rise in inflation would require not only wages or prices to rise for a period after reopening, but also a broad expectation that they will continue to rise at a persistently higher rate,” he said.
Despite limited concern from the Fed and Treasury, the alarm over higher inflation has spread widely in U.S. businesses since the last CPI reading, and has been cited by investors as a reason for a strong stock market sale this week.
Warren Buffett, CEO of Berkshire Hathaway, said earlier this month that his company’s executives saw “very substantial” inflation. “People are raising our prices and it’s being accepted.”
Tyson Foods this week said it had raised prices substantially. “Overall, we see an accelerated inflationary environment that is creating a significant windfall for food prepared in the middle of the year,” said Donnie King, its chief operating officer. “We are seeing raw material costs exceed 15%, as well as increases in logistics, packaging and labor.”
Additional reports by Matthew Rocco
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