New consumer price index (CPI) data showed inflation slowing down on the whole, but the climb down from the peak will be grueling.
We’ll also look at where inflation hit the hardest in April and why the best time to book plane tickets is probably behind you.
But first, here’s your chance to buy some of Betty White’s “Golden Girls” relics.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.
Cooling inflation yields little consumer relief
Inflation may have finally peaked after more than a year of supply chain snarls, labor shortages and a flood of stimulus driving prices higher.
But the climb down from the highest levels of inflation in four decades will be tough, economists say, posing political challenges for the Biden administration, a careful balancing act for the Federal Reserve and a financial crunch for millions of U.S. families.
- Consumer prices rose 8.3 percent over the 12 months ending in April, according to the Labor Department’s consumer price index (CPI), down slightly from an annual inflation rate of 8.5 percent in March.
- The drop was almost entirely driven by gasoline prices falling from a March spike driven by the Russian invasion of Ukraine.
“We think that March 2022 will have marked the peak for annual inflation,” wrote James Knightley, chief international economist at ING, in a Wednesday analysis.
Even so, the road ahead is laden with obstacles likely to keep prices for crucial goods and services rising deeper into the year, Knightly said.
Sylvan explains here.
DIGGING INTO THE NUMBERS
Inflation slowed from a 8.5 percent annual rate in March and a whopping 1.2 percent month-over-month rise as gas and oil prices declined from a peak driven by the war in Ukraine.
- Gasoline prices dropped 6.7 percent in April and energy prices on the whole dropped 2.7 percent last month after double-digit gains in March. Gas prices are still up 44.7 percent over the past 12 months, and energy prices remain 30.3 percent higher than they were in April 2021.
- While a dip in gas prices brought some relief for consumers, inflation in other crucial goods and services continued to rise. Rising prices for food, shelter, airline fares and new vehicles were the biggest contributors to overall inflation in April, the Bureau of Labor Statistics said.
- Inflation for goods other than food and energy, which economists call “core inflation,” also rose 0.6 percent in April after a 0.3 monthly increase in March.
Read more:
- Skyrocketing food prices are alarming lawmakers
- See the products that had significant price spikes in April
Sky-high fares
Airfares jumped 18.6 percent from March to April, according to data released Wednesday by the Labor Department, the largest month-over-month increase for plane tickets on record.
The huge jump comes after airfares increased 10.7 percent from February to March. Overall, flights were 33.3 percent more expensive than they were in April of last year.
- Airfares are skyrocketing amid surging demand for summer travel, high jet fuel prices stemming from the Russia-Ukraine war and light flight schedules from the leading airlines.
- Industry officials believe that U.S. travel will nearly reach pre-pandemic levels this summer, with airports potentially screening a record 3 million passengers on the busiest day.
- On an earnings call last month, Delta Air Lines President Glen Hauenstein said the airline hasn’t “seen a lot of resistance” to high prices, indicating that consumers are willing to pay more this vacation season.
Karl has more here.
FIGHTING FOR FOOD
Biden seeks to boost US production to deal with food shortage
President Biden on Wednesday announced new actions to boost production on U.S. farms to help combat global food insecurity during Russia’s invasion of Ukraine.
“Folks, we can make sure that American agricultural exports will make up for the gap in Ukrainian supplies,” Biden said in remarks at the O’Connor family farm in Kankakee, Ill.
- The White House said it will greatly increase the number of counties eligible for double cropping insurance, streamline the application process for farmers to use technology-driven precision agriculture and double the funding for domestic fertilizer production.
- Global food prices have increased nearly 13 percent since Russia invaded Ukraine, a top exporter of wheat and cooking oil, according to the White House, leading to fears of widespread hunger in the Middle East.
The Hill’s Alex Gangitano has more here.
UNCHARTERED TERRITORY
Charter school advocates launch lobbying blitz against White House proposal
Charter school advocates are mounting an all-out push to defeat a Biden administration rule that they say would crush the industry.
The proposed rule, unveiled by Education Secretary Miguel Cardona last month, would cut off federal grants to charter schools run by for-profit companies, prioritize grants to charter schools that collaborate with local school districts and require prospective charter schools to prove that there is unmet demand for a new school, among other measures.
The proposed requirements would create new roadblocks for charter schools applying for a piece of the federal government’s annual $440 million grant program.
- Charter officials and parents on Wednesday held a rally in front of the White House warning that the changes would severely limit the growth of new charter schools and force numerous existing schools to close.
- The proposal has also sparked uproar from Republicans, who have long aligned themselves with charter schools, and a smaller number of prominent Democrats.
Karl has more here.
Good to Know
The Senate voted along party lines Wednesday to confirm Alvaro Bedoya, President Biden’s nominee to fill the fifth seat on the Federal Trade Commission (FTC), with Vice President Harris casting the tie-breaking 51st vote.
Bedoya’s confirmation will break a 2-2 deadlock that has limited the FTC since the beginning of Biden’s term.
Here’s what else we have our eye on:
- The House voted 371-48 Wednesday to pass a bill aimed at protecting senior citizens from increasingly frequent financial scams.
- President Biden on Wednesday labeled former President Trump the “great MAGA king” and bashed Republicans, notably Sen. Rick Scott (R-Fla.), for their plan to combat inflation.
- Commerce Secretary Gina Raimondo defended the Commerce Department’s investigation of solar panel component manufacturers Wednesday, telling the Senate Appropriations Committee that she hoped to conclude it as quickly as possible.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.