Inflation Eases but It’s Not Time to Celebrate

A 6.1% drop in gasoline prices helped to slow inflation, but food costs are soaring.

May 12, 2022

Inflated Dollar

ALEXANDRIA, Va.—Consumer Price Index data the U.S. government released yesterday indicate that inflation eased a bit in April, rising 0.3% on a seasonally adjusted monthly basis and helped by a 6.1% decline in gasoline prices last month.

On an annual basis, inflation eased to an 8.3% rate before seasonal adjustment, compared with 8.5% for the period ended in March, the U.S. Bureau of Labor Statistics reported. The all- items less food and energy index rose 6.2% over the past 12 months. The energy index rose 30.3% over the past year, and the food index increased 9.4%, the largest 12-month increase since the period ended April 1981, the bureau said.

Driving the increases for the latest period were costs of food, new vehicles, shelter and airfares. The food index rose 0.9% over the month as the food at home index rose 1%. The energy index declined in April after rising in recent months. The index for gasoline fell 6.1% over the month, offsetting increases in the indexes for natural gas and electricity, the bureau said.

Food prices rose 1% from March to April and nearly 11% from a year ago—the biggest jump since 1980, the Associated Press reports. Prices for appliances and clothing both fell 0.8%, and the cost of used vehicles fell 0.4%, the third straight decline.

“Inflation is no longer just contained to the supply chain—these pressures are actually becoming more broad-based,” Aneta Markowska, chief financial economist at Jefferies LLC, told The Wall Street Journal.  The economist said inflation has now spread the services side of the U.S. economy.

Rapid inflation has Americans trimming their spending. In a new CNBC survey, more than half of adults polled plan to cut back on dining out, subscriptions and driving if prices keep climbing.

Nearly 50% of adults polled said rising prices are always on their mind, and 55% of households that earn $50,000 or less constantly think about prices.

Concern about rising prices also has consumers modifying vacation plans. In a survey by Numerator, 37% of consumers indicated they had adjusted their travel plans because of high gasoline prices, including 11% who have scrapped plans and 21% who have delayed trips.

More than 1 in 3 consumers in the Numerator survey said they are putting more effort into finding the lowest prices at the pump, and 24% are consolidating trips and centralizing them to areas around where they fill up. In the survey, 45% of consumers said they are driving less in general, and 31% report making fewer trips to the store.

Consumers also are cutting back on non-essential spending, with 29% saying they are eating out less often, and 24% indicating they are spending less money on discretionary items.

At the NACS State of the Industry Summit last month, Leroy Kelsey, NACS research director, offered some advice for convenience retailers amid inflationary pressures. Value is much more important now to consumers, he said. Assortments need to balance supply chain efficiencies against increased shopper demands for innovation, variety and convenience.

“Customize promos that really speak to [the customer] and reach them where they live in terms of communicating value and relevance,” said Kelsey.