Inflation barreled ahead at 8.3% in April from a year ago, remaining near 40-year highs

The Bureau of Labor Statistics reported Wednesday that inflation rose again in April, and that it is threatening the economic expansion.

The consumer price index, a broad-based measure of prices for goods and services, increased 8.3% from a year ago, higher than the estimate for an 8.1% gain. It was still close to the highest level since the summer of 1982, but it was a slight ease from March's peak.

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Workers lost ground because of the price gains. Real wages adjusted for inflation went down on the month despite a small increase in average hourly earnings. Even though average hourly earnings are up, real earnings have fallen over the past year.

Inflation has been the single biggest threat to a recovery that began early in the pandemic and saw the economy in 2021 stage its biggest single-year growth level since 1984. Inflation has spread beyond the two areas of rising prices at the pump and grocery stores to include housing, auto sales and a host of other areas.

Federal Reserve officials have responded to the problem with two interest rate hikes so far this year and pledges of more until inflation comes down to the central bank's 2% goal. Wednesday's data shows that the Fed has a lot of work to do.

The month-over-month gains were higher than expected, with a 0.6% increase for core and a 0.3% increase for headline.

Even though energy prices declined for the month, the readings came even though. The BLS food index rose in April. Food and energy costs were both up on a 12-month basis.

Adding to the worry is the rise in housing costs.

The shelter index, which makes up about one-third of the CPI, increased another 0.5% in February and was up 5.1% on a yearly basis, its fastest gain in more than 20 years.

Stock market futures turned negative after being positive earlier in the day. The yield on the 10-year Treasury note rose to 3.03%.

Markets were looking for signs that the March 8.5% reading would be the peak of inflation.

Seema Shah, chief strategist at Principal Global Investors, said that the April report shows that the deceleration is going to be painstakingly slow.

Supply chain issues, especially with the semiconductors vital to vehicle operating systems, have pushed prices up, as auto sales have been a big contributor to inflation. The prices of used and new vehicles both fell on the month. Over the past year, the prices for the two categories have gone up.

There were big price increases in selected food areas in April. Chicken was up 3.4% and eggs surged 10.3% amid a bird flu scare, while bacon was up 2.9% and breakfast cereals were up 2.4%.

Increased business travel and vacations have led to an increase in airline fares. The prices went up 21.9% on the month and 33.3% over the past year.

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