During the month of April, consumer prices fell to 4.9%, making this the lowest level of inflation the United States has seen in two years. According to the most recent report that was released by the Bureau of Labor Statistics, there have been some favorable trends for the U.S. economy over the past month. For example, the price of food has still been rising, but at a much slower rate than before.
Fed Wants Lower Inflation
Although inflation has been slowing down steadily, the Federal Reserve has made it clear that reaching a 2% inflation rate for the U.S. economy is still its goal. There certainly is great progress being made when it comes to lowering the inflation number, but it still may be several months before the Fed reaches the goal of a 2% inflation rate.
Low Unemployment
According to the most recent jobs report, the unemployment rate is at 3.4%. This is the lowest is has been since before the pandemic. Additionally, the report shows that hourly wages have increased by almost 4.5% since last April. While this is great for employees who are earning more, this could have a ripple effect on the consumer, as Employers usually raise the prices of goods and services as they pay their workers more.
Prices Continue to Rise
Inflation has been on the decline due to the Federal Reserve rate hikes. However, many companies are still increasing their prices for many consumer goods. For example, two major companies known as Nestle and PepsiCo have announced price increases in their most recent earnings reports. The result of these rising prices has caused groceries to become more expensive as time goes on.
Wrap Up
After the Federal Reserve announced its most recent interest rate hike, interest rates are at the highest level they have been in 16 years. By raising interest rates, the Fed hopes to curb the demand for these goods and services and ultimately lower the prices. This will take time, however as there is still a lot of work to be done for the Fed to reach its goal of 2% inflation.