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Consumer Price Index report for April gives an idea of where inflation stands

MICHEL MARTIN, HOST:

Some good news now. Inflation eased a bit last month. The latest report from the Labor Department comes as something of a relief after hotter-than-expected inflation readings in the three previous months. NPR's Scott Horsley's with us now to tell us more about this. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning.

MARTIN: So what does this morning's report tell us?

HORSLEY: It tells us that consumer prices in April were up 3.4% from a year ago. That's a smaller annual increase than we saw the previous month. Prices also rose less between March and April than forecasters had expected. And so-called core inflation, which strips out food and energy prices, also shows signs of cooling. So all that is definitely good news after a string of high inflation numbers, but we're not out of the woods yet. You know, inflation has come down a lot from where it was a couple of years ago, but prices are still climbing faster than the Federal Reserve would like. Fed Chairman Jerome Powell talked about that yesterday and said he understands how frustrating this is for consumers.

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JEROME POWELL: You tell people inflation is coming down, and they think, I don't understand that, you know, the price of all of the things that I buy hasn't come down. They're not wrong. I mean, they're suffering. Particularly people at the lower end of the income spectrum are very hard hit by inflation from the start, which is why we're so strongly committed to restoring price stability and keeping it in place.

HORSLEY: Of course, the Fed's main weapon for fighting inflation is high interest rates. And Powell and his colleagues are now expected to keep those interest rates high through this summer probably into September.

MARTIN: OK, so if you're trying to buy a house or maybe a car, then you already know this, but just in case that's not you, how are those high rates affecting borrowers?

HORSLEY: Yeah. Well, they're certainly painful for anyone who's trying to buy a house or finance a business, for example. But there are some people who really are not affected by those high rates, folks who already own homes or - and have fixed-rate mortgages. You know, they don't really have to worry about the rising interest rates. And in fact, they might be benefiting from higher interest on their savings accounts.

One group that is really struggling, though, is people who carry a lot of credit card debt. A report from the Federal Reserve Bank of New York yesterday showed almost 1 in 5 credit card users have maxed out their credit limit, in some cases, just to cover everyday expenses. And Ted Rossman, who's with Bankrate points out that is really an expensive form of credit.

TED ROSSMAN: Credit card balances are near record highs, credit card rates are near record highs. There's a cumulative effect to all of this. I mean, if you make minimum payments towards the average credit card balance at the average rate, you could be in debt for nearly two decades.

HORSLEY: Early in the pandemic, a lot of people managed to pay down their credit card debt, but it's now rebounded, and delinquencies - that is, people finding - falling behind on their credit card bills - are now back to pre-pandemic levels.

MARTIN: Scott, who's most affected by rising credit card balances?

HORSLEY: Well, according to the New York Fed, people who are under 30, as well as lower-income families are the most likely to be maxed out, which puts them at a higher risk of falling behind on their credit card bills. On the other hand, though, you've got about half of all credit card users who pay their balance in full every month. So again, they're not really touched by the high interest rates. In fact, they might be getting rewards points as well. So Charlie Wise, who's a senior vice president at the credit reporting company TransUnion says it's really a very mixed picture.

CHARLIE WISE: On average, consumers are keeping their head above water. But there are a lot of pockets of consumers - renters, you know, people that maybe are in industries that haven't benefited from some of the wage gains we've seen - that are struggling and are falling behind.

HORSLEY: Wise says even when the broader economy is doing well, there are always some people experiencing their own personal recession. One concern is that if credit card delinquencies are on the rise now when unemployment's under 4%, what might we be looking at if the job market were to turn south?

MARTIN: That is NPR's Scott Horsley. Scott, thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.