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The Consumer Price Index rose 5.0% between March 2022 and March 2023, marking a slight reprieve from elevated inflation even as price levels in certain categories continue to increase.
The month-to-month increase of 0.1% was below analysts’ expectations of a 0.2% increase, while core inflation, which factors out the more volatile food and energy categories, rose 0.4%, in line with analysts’ forecasts. Food prices were flat, and energy prices declined 3.5% while shelter prices increased 0.6%, according to a Bureau of Labor Statistics report.
“We have seen some signs of easing in spending categories that have pressured household budgets, like food and energy,” Bankrate Chief Financial Analyst Greg McBride said in comments provided to The Daily Wire. “But aside from shelter, trouble spots remain with motor vehicle insurance, household furnishings and supplies, and apparel still posting consistent, and somewhat outsized, monthly increases. Hopes for further relief for household budgets is contingent on seeing these moderating price pressures sustained for several months across a broad range of categories.”
Despite the relative decline from the 6.0% headline inflation charted in February 2023, food and electricity prices have increased 8.5% and 10.2%, respectively, between March 2022 and March 2023. Real wages, which consider the effect of inflation on nominal pay increases, fell 1.3% year-over-year as of March 2023, according to more data from the Bureau of Labor Statistics.
“Easing price pressures for household staples like food and energy are a step in the right direction, though may yet prove fleeting,” McBride continued.
Inflation is more than four times higher than the 1.4% level observed in January 2021, the month President Joe Biden assumed office, but lower than the 9.1% heights charted in June 2022.
The declines in headline inflation come as policymakers at the Federal Reserve increase target federal funds rates to combat rising price levels. The collective rise in interest rates over the past year, on the other hand, has shocked the financial sector: Silicon Valley Bank was forced to sell long-term government securities and corporate bonds at a loss to fund withdrawals, causing the firm to realize heavy losses due to the higher rates and leading to the company’s implosion.
The labor market remains relatively robust despite the declines in real wages, which negatively impact household budgets: The unemployment rate was 3.5% as of March 2023, marking a rate in line with historic lows for the overall economy. Low labor force participation since the lockdown-induced recession has nevertheless contributed to supply chain bottlenecks and inflationary pressures as employers struggle to hire and increase wages.
Biden has repeatedly asserted that his administration is successfully defeating price level increases, even as inflation rates remain between three times and four times higher than the rates seen at the start of his term. “We are making progress in the fight against inflation,” he commented in a recent statement. “The fight against inflation isn’t over, and every day my administration is working to give families more breathing room.”
The commander-in-chief added that his efforts to reduce prescription drug expenses and encourage the domestic manufacturing sector have been responsible for marginally lower inflation over the past several months. “Just as we are working to bring costs down, we are working to build America up,” he continued. “We should continue to invest in America from the middle out and the bottom up. This is not the time to turn back to trickle-down economics by cutting American manufacturing and other critical programs American families count on.”