CPI is expected to rise by 3.4% in April, down from 3.5% in March. Despite high interest rates, inflation remains above the Federal Reserve’s 2% target. The Fed won’t cut the fed funds rate until inflation trends toward 2%.
Stubborn Inflation Trends
Inflation in April exceeded the desired level, with CPI projected to increase by 3.4% annually. The delay by the Federal Reserve in lowering the benchmark interest rate will affect borrowing costs and household budgets, with rising prices for essentials like gas and groceries.
Factors Influencing Inflation
Gasoline prices in April kept inflation levels high, but core inflation, excluding food and energy prices, is projected to have increased by only 0.3%, a slight slowdown compared to last month. Additionally, declining wholesale prices of used cars at auctions could provide hope for overall inflation levels.
Future Outlook and Implications
Economists are monitoring inflation closely. If it stays on track with forecasts, the Fed funds rate will unlikely be cut before December. Official figures from the Bureau of Labor Statistics will provide more insights. This summary covers key points from the recent CPI inflation report and explores its impact on economic policies.
Original article: “What You Need to Know Ahead of Wednesday’s Much Anticipated CPI Inflation Report” https://www.investopedia.com/cpi-inflation-april-2024-preview-8646157
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