WASHINGTON — Consumer prices in the United States rose again in April, and measures of underlying inflation stayed high, a sign that further declines in inflation are likely to be slow and bumpy.
Prices increased 0.4% from March to April, the government said Wednesday, up sharply from a 0.1% rise from February to March. Compared with a year earlier, prices climbed 4.9%, down slightly from March’s year-over-year increase. It was the smallest annual increase in two years.
Even with price pressures rising in April, the latest data did provide some evidence of cooling inflation. Grocery prices fell for a second straight month. And the cost of many services, including airline fares and hotel rooms, plunged. Though apartment rents rose in April, they did so more slowly than in previous months.
The Federal Reserve’s policymakers have been closely watching services prices, and April’s figures could lead them to do what they had signaled after their meeting last week: Pause their rate hikes, after 10 straight increases, while they assess the economic impact the higher borrowing costs have had.
Measured year over year, last month’s decline in inflation was much less than in previous months, underscoring that consumer price increases might not fall back to the Fed’s 2% target until at least well into next year.
Excluding volatile energy and food costs, so-called core prices rose 0.4% from March to April, the same as from February to March. It was the fifth straight month that they have risen at least 0.4%. Core prices are regarded as a reliable gauge of longer-term inflation trends. Compared with a year ago, core inflation rose 5.5%, just below a year-over-year increase of 5.6% in March.
“This is a story of still-sticky core inflation at an elevated level,” said Blerina Uruci, chief U.S. economist for fixed income at T. Rowe Price. “This report puts the Fed on track to keep rates high this year.”
For everyday consumer items, Wednesday’s inflation report was mixed. Gasoline prices jumped 3% just in April. By contrast, grocery prices dropped for a second straight month.
Used car prices surged 4.4% after nine months of declines.
Airline fares, though, dropped 2.6% in April, and hotel prices plunged 3% after four straight monthly increases.
The Fed is paying particular attention to a measure of services inflation that covers such items as dining out, hotel stays and entertainment and that has remained chronically high for much of the past year.
This measure, which excludes energy services and housing, rose just 0.1% from March to April, the smallest increase since last July.
Consumers and businesses continue to struggle with higher costs, and there are signs that some are responding by reining in their spending.
Donald Minerva, who owns the Scottadito Osteria Toscana, an Italian restaurant in Brooklyn, says he has had to raise his prices several times since the pandemic struck to keep pace with rising costs for raw ingredients, all kinds of insurance and higher wages.
Minerva has tried to find ways to save on costs. He has stopped serving lunch during the week and is closed on Mondays and Tuesdays. Even with the reduction in hours, though, his labor costs are about 10% higher than before the pandemic.
With consumers starting to resist higher prices, Minerva said, he’s been forced to drop expensive menus for such holidays as Valentine’s Day and Mother’s Day. He introduced a more costly prix fixe menu for New Year’s, only to see some customers cancel.
“People are not spending as much money,” he said. For New Year’s Eve dinner, “we did what we normally did, and we lost the holiday.”
