Inflation increases again in April, no end in sight for higher energy prices: CEI analysis

The Consumer Price Index for April shows inflation increased by 0.6 percent across all sectors, slightly lower than March’s 0.9 percent but still indicates prices continue to rise. Energy prices, the driving force behind the higher numbers, are unlikely to lower anytime soon.

CEI finance & monetary policy analyst Steve Swedberg:

“Today’s CPI report reinforces a growing concern among economists and markets: inflation in the US is proving far more persistent than policymakers anticipated.

“Recent commentary from major financial institutions and Federal Reserve officials has increasingly centered on the idea of “sticky inflation”, which is when inflation remains stubbornly above normal levels despite economic conditions improving.

“That could create complications for Kevin Warsh since he is poised to be the next Fed chair. Warsh recently signaled openness to lower interest rates and a less restrictive monetary policy. However, persistent inflation could limit the Fed’s flexibility. If policymakers misjudge inflation’s durability, looser monetary policy could place additional upward pressure on household prices.

“What was initially viewed as a temporary inflation shock increasingly appears to be a longer-term affordability problem shaped by a mix of monetary policy and structural factors, including energy volatility, housing shortages, and elevated federal spending.”

CEI senior economist Ryan Young:

“Iran-related energy price increases continued for a second month. Energy prices are unlikely to come down anytime soon, even if the war were to end today. Damaged infrastructure will take time to rebuild, and uncertainty will cloud at least the next several months. 

“If the Fed was considering an interest rate cut later this year, that is now even less likely.”