Don’t miss CoinDesk’s Consensus 2022 , the must-attend crypto & blockchain festival experience of the year in Austin, TX this June 9-12.
U.S.inflation slowed last month for the first time since November 2020, a Labor Department report Wednesday showed.
The consumer price index (CPI), the most widely used gauge to track inflation, dropped to 8.3% in April from a year earlier, down from 8.5% in March, a four-decade high, according to a report from the U.S.Labor Department published Wednesday.Economists had estimated an 8.1% rate for April.
Core inflation, which excludes seasonally volatile food and energy prices, rose 0.6% from March levels, doubling from the prior month’s rate and faster than the 0.4% clip that economists had forecast.
Bitcoin ( BTC ) was down 4.8% within minutes after the report was released, changing hands at $30,145.
Crypto analysts and traditional economists alike are watching core inflation particularly closely this month, as headline inflation figures could be misleading due to a big jump in the CPI index this time last year.
“The year-on year-numbers are going to come down, almost no matter what,” said Eric Winograd, senior vice president and director of developed-market economic research at AllianceBernstein.”That isn’t particularly meaningful, because it doesn’t tell us what’s really going on with prices right now.It tells us what went on with prices a year ago.”
The CPI index saw a big jump in spring last year, from 2.6% in March to 4.7% in April, making it difficult to draw comparisons between this year’s March and April numbers.
Consumer Price Index, % Change Over 12 Months, including forecasted number for April 2022 CPI (Source: CoinDesk Research, Department of Labor Statistics, FactSet) Core inflation, however, looks at the percentage change month-over-month, which is why analysts prefer looking at that data point to evaluate current inflationary pressure.
Compared to inflation reports earlier this year, April’s report could be less significant for traders in general, as they track inflation to make assumptions about what the Federal Reserve might do to keep it in check.
Story continues “They’ve already told us their next step,” said Winograd.“So it takes something very dramatically different for them to change that path.”
Fed Chair Jerome Powell has already said that it is very likely that the central bank will keep hiking rates by 50 basis points (0.5 percentage point) at the next couple meetings.
President Biden weighs in Many critics blame President Joe Biden for the worst inflation in 40 years, and for deflecting the blame for the current state of the economy.
With midterm elections coming up in November, which will play an important role in how the Federal Reserve will handle rate hikes in the fall, the president spoke about inflation on Tuesday, assuring Americans that he is “taking inflation very seriously and it’s my top domestic priority.”
“President Biden and the Democrats are likely to be hard-put to maintain their majority in Congress,” said Scott MacDonald, chief economist at Smith’s Research & Gradings.“An economy in trouble, with a recession of near-recession, tight money policy and inflation does not make a good tailwind.”.