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U.S. inflation rate below 5% for first time in 2 years

The inflation rate is still higher than officials want but has gradually declined since June 2022.
U.S. inflation rate below 5% for first time in 2 years
Posted at 6:36 AM, May 10, 2023

The consumer price index, which measures the rate of inflation in the U.S., dropped to 4.9% for the 12-month period ending in April, according to new data released by the government’s Bureau of Labor Statistics. 

The updated consumer price index marked the first time since May 2021 the consumer price index was below 5% in the U.S. The CPI has gradually fallen since June 2022, when it reached a peak of 9.1%, its highest rate in nearly four decades. 

The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.

Food costs are up 7.7% for the year ending in April, but the government’s data shows food was no more expensive in April than it was in February. Shelter costs are up 8.1% for the year, and prices continued to increase in recent months. 

Lower energy costs have helped drive the inflation rate down. Energy costs are 5.1% cheaper than a year ago when the average gallon of gas jumped over $4 for much of the U.S. 

SEE MORE: Job market remains robust despite interest rate jump

The lower inflation rate is nearly in line with pay increases for workers. Government data shows a 4.4% increase in average hourly earnings in the last year. 

Whether declining inflation means a halt to rising interest rates remains to be seen. Federal Reserve Chair Jerome Powell said both rising wages and inflation caused the Fed to continue raising interest rates. Powell said the Fed’s goal is to limit inflation to an annual increase of 2%.

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