Inflation Spiked 8.3% In April—Have Surging Prices Finally Peaked?

Overall prices rose 0.3% from March—higher than the 0.2% economists were expecting but much lower than the previous month’s increase of 1.2%, according to data released by the Labor Department on Wednesday.

On a yearly basis, prices jumped 8.3% last month, falling from 8.5% in March but exceeding expectations calling for an increase of 8.1%; the slowdown marked the first month-over-month decline since August.

The overall increase was the result of broad upticks across shelter, food, airline fares and new vehicle prices, while a month-over-month decline of 6.1% in long-surging gasoline prices (which spiked 18% in March) helped offset the gains, the government said.

Core inflation, which excludes volatile food and energy prices, dropped to 6.2% from 6.5%—a “seriously disappointing” decline given expectations for a steeper drop, Pantheon Macroeconomics chief economist Ian Shepherdson said in an email Wednesday, pointing out a 1.1% increase in new vehicle prices was “significantly bigger” than in recent months.

In a weekend note to clients, Goldman Sachs economist Ronnie Walker cautioned the inflation outlook remains “highly uncertain” due to lingering supply chains, red-hot wage growth and still-surging commodity prices—with gas prices, for example, jumping to record highs on Tuesday.

The economist expects shelter inflation will remain firm amid the tightest housing market in decades, while price spikes driven by supply chain constraints will “fall sharply” as bottlenecks ease, particularly in used cars and consumer electronics, which saw prices continue to fall in April.