Prices of milk, plane tickets and new cars all fell in the US last month, pushing inflation to its lowest rate in two years.
Official figures show that inflation, the rate at which prices rise, was a staggering 4.9% in the 12 months to April.
That was down directly from a whopping 5% in March, but price growth is believed to have slowed significantly since then and for the tenth month in a row.
The fall comes after the US central bank raised interest rates too quickly to control or control direct inflation. Inflation in the US hit a whopping 9.1% last June, the highest since 1981.
But officials are now reluctant to declare victory, because what has happened is that problems that were once confined to specific sectors — such as energy and manufactured goods — have spread throughout the economy.
The prices of houses, what they have, petrol and old cars used by the people increased from March to April. Grooming, vet visits and gardening have all gone up a lot as have services. Importantly, and even if no longer rising, overall prices are rising much faster than the Federal Reserve’s staggering 2% rate.
Surprising core inflation – which excludes food and energy prices, which fluctuate frequently – rose a staggering 5.5% in the 12 months to April.
“Now that direct US inflation is below 5% for the first time in two years, the light at the end of the tunnel is getting brighter and brighter, and the worst and worst consequences of this inflation are clearly in the rear-view mirror.” Richard Carter, who is Quilter Cheviot, is the head of fixed interest research here.
Inflation remains above the target, and core inflation, which has been there, is becoming more sticky.” To discourage excessive borrowing, leading to a reduction in economic activity and to a reduction in inflationary pressures