US President Joe Biden said the Federal Reserve has a “primary role” in fighting rising prices after a report on Wednesday showed inflation is likely to stay hot.
The Labour Department reported that the consumer price index rose by 0.3 per cent in April compared to a month earlier, and 8.3 per cent compared to the same month last year.
But the deceleration in the CPI is probably temporary. Petrol prices, which accounted for most of the pullback in the monthly inflation rate, are rising again and were about $4.161 per gallon early this week after dipping below $4 in April, the Energy Information Administration said.
“While it is heartening to see that annual inflation moderated in April, the fact remains that inflation is unacceptably high,” Mr Biden said in a statement.
The president said actions to tamp down soaring costs “starts with the Federal Reserve, which plays a primary role in fighting inflation in our country”.
Russia's unprovoked war against Ukraine is the main catalyst for the surge in gasoline prices. The war has also driven up global good prices.
Inflation was already a problem before Moscow's February 24 invasion of Ukraine because of stretched global supply chains as economies come out of the Covid-19 pandemic after governments around the world injected large amounts of money into pandemic relief and central banks slashed interest rates.
President Joe Biden on Tuesday acknowledged the pain that high inflation was inflicting on American families and said bringing prices down “is my top domestic priority”.
Mr Biden has recently acknowledged the pain inflation was causing American families and has stated bringing down prices is his top domestic and economic priority.
The Fed last week raised its policy interest rate by half a percentage point, the biggest rise in 22 years, and said it would begin trimming its bond holdings next month. The US central bank started raising rates in March.
“While I will never interfere with the Fed’s independence, I believe we have built a strong economy and a strong labour market, and I agree with what Chairman [Jerome] Powell said last week that the number one threat to that strength is inflation,” Mr Biden said.
“I am confident the Fed will do its job with that in mind.”
In the 12 months through April, the CPI increased 8.3 per cent. While that was the first deceleration in the annual CPI since last August, it marked the seventh straight month of increases in excess of 6 per cent. The CPI shot up 8.5 per cent in March, the largest year-on-year gain since December 1981.
While monthly inflation is likely to pick up, annual readings are likely to subside further as last year's large increases fall out of the calculation, but remain above the Fed's 2 per cent target at least through 2023.
China's “zero tolerance” Covid-19 policy is expected to put more strain on global supply chains, driving up goods prices. Prices for services like air travel and hotel accommodation are also seen keeping inflation elevated amid both strong demand over the summer and a shortage of workers.
Solid gains in rents, airline fares and new motor vehicle prices boosted underlying inflation last month.
Excluding the volatile food and energy components, the CPI picked up 0.6 per cent after rising 0.3 per cent in March. The so-called core CPI increased 6.2 per cent in the 12 months through April. That followed a 6.5 per cent jump in March — largest gain since August 1982.
Reuters contributed to this report