Annual inflation fell to 4.9% in April — the bottom it has been in two years — however costs are nonetheless climbing. A spike in used automobile costs contributed to final month’s bounce within the cost-of-living index.
MARY LOUISE KELLY, HOST:
For the primary time in two years, inflation has dropped to below 5%, however barely. Annual inflation was 4.9% for April. That’s down solely barely from the month earlier than, which means folks searching for used vehicles might have suffered sticker shock, however there have been some financial savings to be discovered on airline tickets. NPR’s Scott Horsley is right here to speak us by this. Hey, Scott.
SCOTT HORSLEY, BYLINE: Hello, Mary Louise.
KELLY: Inflation is coming down slowly, slowly. Inform me the place it’s serving to folks and the place are we nonetheless paying extra.
HORSLEY: Yeah, it was a extremely blended bag in April. Gasoline costs had been up final month, however pure gasoline and electrical energy costs had been down. Groceries received a bit bit cheaper in April for the second month in a row, nevertheless it price extra to eat out. Used automobile costs, as you talked about, had been an enormous driver of inflation final month. That they had been falling for many of the final yr, however they made a U-turn in April and rose by a whopping 4.4%. Pat Ryan, who’s CEO on the automobile shopping for app CoPilot, says there’s simply plenty of demand on used automobile tons proper now for high-end SUVs, principally from rich consumers who are usually not turned off by the rising rates of interest on automobile loans. Ryan says it is a powerful market, although, for anyone who simply wants a fundamental car to get backwards and forwards to work.
PAT RYAN: If it’s worthwhile to purchase one other $20,000 automobile, there merely aren’t that many out there relative to the calls for. And actually, what which means is individuals are having to purchase older vehicles, usually higher-mileage vehicles, which places these consumers prone to greater payments to keep up and restore these vehicles over time.
HORSLEY: And the price of automobile restore additionally rose final month. It is up greater than 20% during the last 12 months.
KELLY: And the way are we trying on aircraft tickets? As a result of I simply paid a fortune for a few flights. How are we searching for summer time trip?
HORSLEY: Yeah, there’s truly some encouraging information there. Lodge room charges dropped greater than 3% in April, and airfares, which had been sky-high, got here again all the way down to earth as nicely. Omair Sharif, who runs a forecasting agency referred to as Inflation Insights, says airways are decreasing fares on some flights, regardless that planes are fairly full and the crowds at TSA checkpoints are principally again to pre-pandemic ranges.
OMAIR SHARIF: So it isn’t that individuals are not touring as a lot, however the stress on airfares from jet gas prices has receded. You recognize, you are additionally getting to some extent the place there’s solely a lot I believe individuals are going to bear by way of how a lot it prices to fly from New York to LA or Chicago to Miami or wherever.
HORSLEY: And the drop in airfares in April helped to maintain a lid on service value inflation final month. That is one thing that the Federal Reserve has been conserving a detailed eye on.
KELLY: Talking of the Fed, their technique has been – they’re attempting to curb inflation. The place does this depart them?
HORSLEY: Yeah, the Fed’s purpose is to get inflation again all the way down to 2%, and costs are shifting in that route. However as you mentioned, they are not shifting very quick. Inflation has come down from simply over 9% final summer time to simply below 5% in April. However getting from 5 to 2% could possibly be a slog. The Fed’s already raised rates of interest 10 occasions within the final 14 months in an effort to tamp down demand and get costs below management. Final week, the Fed hinted that charges might have gone excessive sufficient, and that now it is only a matter of time earlier than inflation settles down. Oren Klachkin, who’s with Oxford Economics, thinks that affected person method could be the suitable name.
OREN KLACHKIN: The Fed is in a tough scenario proper now. They need to positively carry inflation down, however they do not need to put an excessive amount of stress on the financial system.
HORSLEY: In spite of everything, the financial system’s going through loads of different stresses already.
KELLY: Elaborate on that. What different stresses?
HORSLEY: Nicely, there’s the turmoil within the banking system. That is making credit score tougher to return by, which could possibly be a drag on companies that need to develop and rent. After which we have this wild card of the debt restrict talks right here in Washington. If these finish badly, we may get a authorities default, which might in all probability assist to decrease inflation, however solely by sending the financial system right into a tailspin.
KELLY: Thanks, Scott.
HORSLEY: You are welcome.
KELLY: NPR’s Scott Horsley.
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