Consumer prices continue to rise rapidly


Central bankers are hoping their policies will temper economic growth without driving up unemployment or plunging America into a recession – creating what they often call a “soft landing”.

“I really want this to be the outcome, but I recognize that it won’t be easy to do,” Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said in an interview Monday.

Officials clearly acknowledged that it would be difficult to let the economy down smoothly, and some suggested they would be prepared to inflict economic pain if that was what it took to fight high inflation.

If the economy gets to a point where unemployment starts to climb but inflation remains “unacceptably high”, Mr Bostic said, price hikes will be “the threat we have to address”.

A challenge for policymakers – and even more so for families – is that price increases are surfacing in basic necessities. Food prices rose 0.9% in April from the previous month, the 17th consecutive monthly increase, according to Wednesday’s report.

The increase was led by dairy products, soft drinks and a 10.3% monthly rise in the cost of eggs as bird flu decimated poultry flocks. Such inflation tends to particularly affect the poor, who spend more of their budget on necessities such as groceries and gasoline.

But while Americans are seeing strong job gains and strong wage growth — although not strong enough to fully counter inflation — many are managing to weather rising costs for now, keeping aggregate demand strong.

“Consumers seem willing to accept the higher menu prices, especially as inflation runs wide,” George Holm, chief executive of food retailer and restaurant supplier Performance Food Group, said on a call on Wednesday. to the results. “Nevertheless, it’s something to watch closely over the coming months and quarters.”

Ana Swanson contributed report.


Leave a Reply

Your email address will not be published.