Inflation eased in April, rising 8.3% a year, and remained close to its previous 40-year high of 8.5% set the month before, according to the latest home price index report. consumption published by the Bureau of Labor Statistics (BLS).

The cooling, while not as severe as some expected, was mainly due to increases in housing, food, airfares and new vehicles. The food index jumped 0.9% in April alone, but the energy index fell 6.1%, partially reversing previous increases.

Rising prices continue to strain Americans’ wallets. For example, some low-income borrowers are being overpriced completely out of the new car market, unable to cope with the rising costs of a new vehicle. Meanwhile, plane ticket prices have skyrocketed also, as the cost of jet fuel increases.

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April inflation figures higher than expected

Although inflation has eased slightly, signaling a possible peak, the slowdown has not been as significant as experts had expected. In fact, one expert said the number was still too high despite the cooling.

“April marks a full year since prices started to rise dramatically, which means it’s going to get harder and harder for 12-month inflation to stay as high as it was in March. “said John Leer, chief economist of Morning Consult. “The most optimistic interpretation of today’s CPI is likely to be that inflation has peaked and price growth is starting to slow.

“It’s important to keep in mind that even though inflation fell in April to 6.5% or 7% from last year, it’s still far too high,” Leer added. “It’s too high for businesses to make investing and hiring decisions with confidence, and it’s too high for consumers to keep spending.”

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President Biden unveils plan to fight inflation

The Federal Reserve is fighting to reduce runaway inflation levels by raising interest rates. So far, the central bank has raised rates by 25 basis points at its March meeting and 50 basis points at its May meeting.

“Another 50 basis point increase is expected in June,” said Dawit Kebede, senior economist at the Credit Union National Association (CUNA). “The monetary policy change takes effect with a lag; therefore, the changes may not be sufficient to meet the Fed’s year-end inflation projection.”

President Joe Biden has now released his own plan, dubbed The Biden-Harris Inflation Plan, which would raise taxes on big business and wealthy Americans.

“The President understands that the Federal Reserve is the institution that plays a primary role in fighting inflation,” the White House said in a statement on the plan. “The President has appointed highly qualified individuals to lead the Fed and urges the Senate to confirm all of these individuals without delay. Beyond the Federal Reserve, President Biden is taking short, medium, and long-term steps to reduce costs families and reduce the deficit.

Principles of the plan include reducing gas and energy costs, reducing daily costs for American families and more. Leer, however, is skeptical that the measures would bring a significant change towards inflation in the coming months.

“Congress and the White House have the ability to alter the long-term path of inflation by improving the productive capacity of the U.S. economy through investments in human and physical capital, but they lack the tools to control month-to-month inflation,” he added. mentioned. “Furthermore, many of the obstacles preventing an expansion of affordable housing are at the state and local level. I appreciate the political challenges that inflation poses to the White House, but I don’t think that there’s a lot they can do about this over the next few months.”

If you want to take advantage of interest rates before they rise further, you can consider refinancing your home loan to save on monthly mortgage payments. Contact Credible to speak with a mortgage expert and get all your questions answered.

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