The latest US inflation data shows a glimpse of what might have been: an inflation rate falling steadily towards the Federal Reserve Board’s target, lower interest rates and a growing economy, writes Stephen Bartholomeusz.
Alas, the data doesn’t capture the impact of Donald Trump’s global trade war, which probably won’t start to surface until next month or be fully reflected until well into the second half of the year.
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The consumer price index for April confirms that, when Joe Biden handed over stewardship of the world’s largest economy to Trump in January, the US was in good shape.
The headline inflation rate rose 2.3 per cent in April, the lowest rise since February 2021, when the supply chain shock from the pandemic was about to gather momentum and send prices soaring.
Core inflation – excluding volatile food and energy prices – rose at a 2.1 per cent annual rate over the three months to the end of April, marginally above the Fed’s 2 per cent target.
That is, of course, old news. Trump announced his main tariff plans – a 10 per cent universal baseline tariff, “reciprocal” tariffs of up to 100 per cent on the 90-odd countries with whom the US has a trade deficit and 145 per cent on China – on his so-called “Liberation Day” on April 2, with the tariffs coming into effect a week or so later.
Read the full analysis here.
Read the full article here
