US inflation sees biggest leap in nearly 13 years
Consumer prices in the United States shot up 4.2 per cent in the 12 months to April, which could add fuel to market fears of a lengthy period of higher inflation.
The jump marked the biggest increase in consumer prices since June 2009, and the biggest inflation gain since September 2008.
The jump also followed a hefty 2.6 per cent increase in consumer prices in March.
Today’s report from the US Labor Department also showed a strong build-up of underlying price pressures, extending a stocks selloff on Wall Street.
Despite market fears, most economists were unwavering in their belief that the surge in prices would be temporary, noting that the main drivers of the bigger-than-expected inflation increase were hotels and airlines, industries that were hardest hit by the coronavirus pandemic.
“This is not a sign of an inflation problem,” said Robert Barbera, director of Johns Hopkins University’s Center for Financial Economics. “We have the capacity to produce this stuff, we simply need time to get things back on line.”
Stocks on Wall Street fell, building on the previous session’s losses, as investors worried that surging inflation could force the Fed to raise interest rates sooner than expected.
The dollar strengthened against a basket of currencies.