Here’s a breakdown of inflation for April 2023 in a chart

Inflation in April recorded the lowest reading in two years, as price pressure for consumers continue to moderate The cost of more household staples appears to be retreating from multi-decade highs.

consumer price Index, a key barometer of inflation, rose 4.9% in April from a year earlier. This is the smallest annual reading since April 2021, the US Bureau of Labor Statistics or BLS said on Wednesday.

The index also fell by 5% in March, registering a decline for the 10th consecutive month.

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“Increasingly, we can be confident that inflation is coming back,” said Mark Zandi, chief economist at Moody’s Analytics.

Inflation measures how quickly prices are changing in the US economy. The CPI measures anything from the prices of fruits and vegetables to haircuts or concert tickets.

Since the CPI reading was a positive number in April, it means that consumers did not see a decline in prices in a broad sense. But it shows that the rate at which they are growing has slowed down significantly from a peak of 9.1% in June 2022.

Policymakers aim to bring inflation down to around 2% p.a., It may take another year to reach that goal, Zandi said, but “we’re certainly moving in that direction.”

On the other hand, monthly prices increased significantly in categories such as shelter, used cars and trucks, motor vehicle insurance, entertainment and personal care, according to the BLS.

Petrol prices also increased by 3% in April compared to March, although they have decreased by 12% in the last 12 months.

The BLS said housing, the largest component of the average household budget, was the largest contributor to inflation in April. The cost of shelter rose 0.4% in April compared to the previous month, a decrease of 0.6% in March.

However, average rents have remained flat or flat in the past six months, a trend that will soon be reflected in the low Inflation Readings for ShelterThat’s because those price dynamics typically take several months to feed through federal data, economists said.

“It looks like inflation [shelter] The range has peaked,” said Andrew Hunter, senior US economist at Capital Economics.

Overall, households are doing much better than they were months ago, according to Zandi, when compared with inflation in staples such as food, energy and housing.

“Gas prices are much lower than they were a year ago,” he said. “Food prices are no longer rising fast enough.”

“And rents are flat below now,” Zandi said. “They’re major items in people’s budgets and they all feel great at the moment.”

Consumer prices began to rise sharply in early 2021 as the US economy began to reopen after pandemic-related shutdowns. Americans resorted to a flurry of pent-up demand for dining out, entertainment and vacations, aided by savings from government relief.

Meanwhile, a rapid economic restart has given global supply chains a dynamic deepened by Russia’s invasion of Ukraine, In other words, supply cannot keep up with consumers’ willingness to spend.

Inflation, which rose in economies around the world in the wake of the COVID-19 pandemic, initially increased in categories of physical goods such as used cars and trucks, But the dynamic has morphed.

Now, it’s being driven largely by the labor market, not material goods shortages, economists said.

As the economy reopened after the pandemic, businesses raced to hire workers and job openings hit record highs. That demand tilted the job market in favor of workers who had ample opportunities. They’ve seen salaries rise at their fastest pace in decades as employers compete to hire them.

Economists said strong wage growth prompted employers, especially labor-intensive service businesses, to raise their prices.

But now, “earlier peak levels of excess demand for workers are receding,” Hunter said.

Those labor-market dynamics should continue to exert downward pressure on overall inflation.

“The trend is definitely looking a lot better from here,” Hunter said. “I think we’re finally seeing clear signs of progress.”