U.S. inflation soars in April to 13-year high, CPI shows, and reveals fresh stress on the economy

www.marketwatch.com
4 min read
fairly easy
Surging inflation adds new stress to U.S. economy
The numbers: Consumer prices rose sharply again in April and drove the rate of inflation to the highest level in nearly 13 years, signaling greater stress on the economy as businesses grapple with supply shortages that are raising the cost of many goods and services.

The consumer price index soared 0.8% to match the biggest monthly increase since 2009, the government said Wednesday. Economists polled by Dow Jones and The Wall Street Journal had forecast a milder 0.2% advance.

The rate of inflation over the past year jumped to 4.2% from 2.6% in the prior month — the highest level since 2008.

The pace of inflation has surged after years of languishing at unusually low levels largely due to the rapid reopening of the U.S. economy.

Businesses can't keep up in demand, a problem exacerbated by ongoing bottlenecks in the global trading system tied to the pandemic. Computer chips are especially in short supply and that's held up production of new autos and other manufactured goods.

Americans are also rushing to dine out, travel or go far away for vacation, activities they shied away from during the pandemic. That's also driving up prices at popular vacation resorts and other venues where people plan to congregate.

Senior Federal Reserve officials, who are supposed to protect the U.S. from high inflation, insist the increase is temporary. They contend inflation will subside by next year once the pandemic fades, most people go back to work and the global economy is largely recovered.

Investors are less sure. U.S. interest rates have risen in the past six months on worries about inflation…
Jeffry Bartash
Read full article