American consumer price index rises more than expected

American consumer price index rises more than expected

The latest data shows that the US consumer price index (CPI) rose more than expected in March. It recorded an increase of 0.4 percent, which is the same as the previous month. On a 12-month basis, the index rose 3.5 percent, compared to 3.2 percent in February. The adjusted index, which excludes food and energy prices, actually rose 3.8 percent, almost twice the Federal Reserve's inflation target.

The question is whether inflation is more persistent than the Federal Reserve expects. The central bank originally planned to cut key interest rates three times this year, but such measures could be at risk given persistently high inflation. The current key interest rate range of 5.25 percent to 5.5 percent has stagnated since July last year. The Federal Reserve had hoped for easing inflation to justify cutting interest rates, but current developments raise doubts.

The S&P 500 index reacted negatively to the new economic data and recorded a decline of around 1.2 percent. Jamie Dimon, chief executive of JP MorganChase, warned against excessive optimism, noting that high government spending and budget deficits could push inflation and interest rates higher than expected.

Despite positive labor market data and a robust economic situation in the USA, the prospects of a key interest rate cut could be clouded by ongoing inflation. A particular focus is on the impact of immigrants on the labor market and the potential impact on inflation. However, a survey of small businesses shows declining confidence among bosses, with inflation cited as the biggest economic problem, followed by the quality of workers.