U.S. consumer prices surged in April, with a measure of underlying inflation blowing past the Federal Reserve’s 2 percent target and posting its largest annual gain since 1992, reflecting pent-up demand as the economy reopens.
The strong inflation readings reported by the Commerce Department on Friday had been widely anticipated as the COVID-19 pandemic’s grip eases, thanks to vaccinations, and will have no impact on monetary policy. Fed Chair Jerome Powell has repeatedly stated that higher inflation will be transitory, with supply chains expected to adapt and become more efficient.
Most economists share the U.S. central bank chief’s views. The supply constraints largely reflect a shift in demand towards goods and away from services during the pandemic. Inflation is also accelerating as last spring’s weak readings drop from the calculation.
“The central bank is going to look through the acceleration in inflation, for now,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Click here to read the full report from Lucia Mutikani in Yahoo Finance.