Food prices have been high for nearly three years, hurting consumers' wallets and causing those on fixed incomes, such as the elderly, to tighten their belts.
by Matthew Rusling
WASHINGTON, April 11 (Xinhua) -- Figures released Wednesday showed no end in sight for U.S. inflation, meaning there's little hope for an interest rate cut any time soon.
FASTER THAN ANTICIPATED
Wednesday saw the consumer price index (CPI) accelerate at a clip faster than analysts had anticipated. The index, a main gauge of inflation, increased 0.4 percent in March from the month prior and 3.5 percent from the same time a year ago, according to data released from the Bureau of Labor Statistics on Wednesday.
Economists had been expecting a 0.3 percent monthly rise and a 3.4 percent annual increase.
Core CPI, which strips out food and energy, rose 0.4 percent month-on-month and a hefty 3.8 percent from the same time a year ago.
Driving the CPI increase were the costs of shelter and energy. Energy increased 1.1 percent after ratcheting up 2.3 percent in February, and costs of shelter rose 0.4 percent month-on-month and a robust 5.7 percent from the same time last year.
INFLATION AND INTEREST RATES
Desmond Lachman, a senior fellow at the American Enterprise Institute and a former official at the International Monetary Fund (IMF), told Xinhua that Wednesday's inflation numbers, together with still strong job numbers, now make "highly improbable" any rate cuts before the year's second half.
"This is especially the case given the deteriorating situation in the Middle East that is now once again driving up international oil prices," Lachman said.
Lachman also argued that "today's disappointing consumer price inflation numbers suggest that inflation will not come down to the Federal Reserve's 2 percent inflation target without a recession."
"They also suggest that interest rates will need to stay high for longer to regain inflation control," Lachman said.
In recent public statements, Fed Chair Jerome Powell has reiterated that the Fed will only cut interest rates when it sees clear signs that inflation is coming down on a sustainable basis towards the Fed's target.
"On inflation, it is too soon to say whether the recent readings represent more than just a bump," Powell said last week.
Barry Bosworth, an economist and senior fellow at the Brookings Institution, told Xinhua the Fed is "very unlikely" to reduce interest rates in the near future.
"Interest rates look to remain near current levels for many months. Rate reductions look irresponsible at this time," Bosworth said.
Dean Baker, a senior economist at the Center for Economic and Policy Research, told Xinhua that while rental inflation remains high, it's coming down.
"The process of rental disinflation is just taking longer than I and most economists expected," Baker said.
U.S. Federal Reserve officials say that recent data has not increased their confidence that inflation is moving sustainably down to 2 percent, noting that risks around the inflation forecast are seen as tilted slightly to the "upside," according to the Fed's latest meeting released Wednesday.
HIGH PRICES HURTING CONSUMERS
Food prices have been high for nearly three years, hurting consumers' wallets and causing those on fixed incomes, such as the elderly, to tighten their belts.
The measure for prices of eggs, meat, fish and poultry is up 0.9 percent, spurred by a 4.6 percent rise in egg prices.
A recent Gallup poll showed that high inflation and the state of the economy remain at the top of the list of Americans' biggest concerns, with at least 60 percent of respondents saying they have "a great deal" of concern.
Indeed, grocery shoppers complain about the high cost of daily staples, and consumers are often overheard griping about high costs at local supermarkets.
Linda Harrison, 67, a retiree in the state of New Jersey, told Xinhua that people are angry about the sudden increase in food prices over the past few years.
"Prices soared and then came down a bit and government officials were patting themselves on the back saying that their efforts are helping middle-class families afford groceries," she said.
"People are now on social media telling others where to buy less expensive meats," she said.■