Latest news with #LauraRosner-Warburton
Time of India
13-05-2025
- Business
- Time of India
US inflation softens to 2.3% in April despite tariffs; Economists caution on future price pressures
US inflation eased for a third consecutive month in April, as falling grocery and gasoline prices offset early impacts from recently imposed tariffs. However, economists caution that price pressures may re-emerge in the coming months as the full effects of trade duties begin to filter through the economy. Consumer prices rose 2.3% in April from a year ago, the Labor Department said Tuesday, down from 2.4% in March and the smallest increase in more than four years. On a monthly basis, prices rose modestly, increasing 0.2% from March to April after falling 0.1% the previous month, the first drop in five years. Grocery prices fell 0.4%, pulled down in part by a big 12.7% drop in the price of eggs. It was the biggest decline in food costs at home since September 2020, the government said. Food prices at home declined 0.4%, with egg prices falling a sharp 12.7%, contributing to the largest single-month drop in grocery prices since September 2020. Energy prices also eased, helping moderate overall inflation. The data indicates that tariffs imposed by President Donald Trump have yet to significantly influence consumer prices. Despite broad-based duties — including 25% tariffs on steel and aluminum, a 10% universal tariff enacted on April 2, and previously announced 145% import taxes on Chinese goods (now reduced to 30%) — many product categories saw minimal price changes. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Seniors Born 1941-1979 Receive 55 Benefits This Month if They Ask WalletJump Learn More Undo Apparel prices declined 0.2%, new car prices remained unchanged, and furniture costs rose 1.5% over the month. 'Firms have indicated... that they are unsure how much of the tariff cost increase they can pass through to consumers without denting demand, and we expect some testing of the waters and a staggered pattern of price increases,' said Laura Rosner-Warburton, cofounder, Macro Policy Perspectives. Economists suggest that the full impact of tariffs may not be reflected immediately, as many businesses had already stockpiled inventory and some imports were in transit before the duties took effect. Meanwhile, core CPI, which excludes food and energy, increased 2.8% annually, unchanged from March. On a monthly basis, core prices rose 0.3%, up from 0.1% the previous month — a potential signal of building underlying inflation. The White House announced Monday that it had reached a trade agreement with China, reducing tariffs on Chinese goods from 145% to 30%, while China also lowered duties on US imports. The agreement includes a 90-day review window, after which 24% tariffs could return if further progress is not made. Despite the deal, the average US tariff remains historically high. The Yale Budget Lab estimates the current average is 18%, the highest since 1934. According to their analysis, tariffs at this level could lift prices by 1.7% and cost the average US household approximately $2,800 per year. Gasoline prices, meanwhile, averaged $3.14 per gallon, according to AAA, contradicting Trump's repeated claims that prices had fallen to $1.98 per gallon nationwide. 'Tariffs is the most beautiful word,' Trump has said in support of the policy, suggesting duties will continue to play a central role in his economic strategy. While inflation is currently nearing the Federal Reserve's 2% target, the combination of persistent tariffs, volatile global trade dynamics, and constrained consumer spending could complicate future monetary policy decisions. 'The duties have raised the risk of both higher inflation and higher unemployment,' said Fed Chair Jerome Powell last week. 'Two challenges that rarely occur simultaneously.' In such a scenario, the Fed would be forced to balance its dual mandate. Lower interest rates might stimulate growth amid rising joblessness, while elevated inflation typically calls for tighter monetary policy — a contradiction that could restrict the Fed's room to maneuver. Economists expect more pronounced tariff impacts in the second half of the year, depending on supply chain adjustments, consumer tolerance for higher prices, and further developments in international trade agreements. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Boston Globe
13-05-2025
- Business
- Boston Globe
Tariffs may have pushed up inflation a bit in April, government report to show
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'Firms have indicated ... that they are unsure how much of the tariff cost increase they can pass through to consumers without denting demand, and we expect some testing of the waters and a staggered pattern of price increases,' Laura Rosner-Warburton, cofounder of Macro Policy Perspectives, wrote in note to clients. Advertisement The Trump administration said early Monday that it had reached a deal with China to sharply reduce its tariffs on imports from that country. But even taking that agreement into account, U.S. average import taxes remain at 90-year highs, economists said, which could worsen inflation in the coming months. Advertisement Tariffs on furniture, agricultural goods from Mexico, and on clothes and shoes may have boosted prices last month. Auto prices may have risen because car sales surged as Americans sought to get ahead of duties on new cars and car parts, reducing the need for dealers to offer discounts. Excluding the volatile food and energy categories, core prices are forecast to have risen 2.8% last month compared to a year earlier, the same as in March. On a monthly basis, they are expected to rise 0.3%, up from just 0.1% the previous month. It will likely take more time for the full impact of the duties to be reflected in prices across U.S. businesses, economists say. Items that were already in transit when the tariffs were imposed won't have to pay the duties, while many companies have built a stockpile of goods and could hold off on price hikes in hopes that tariffs will ultimately be reduced. Consumers, at least those outside the top one-fifth in incomes, are also more stretched financially than a few years ago and are more likely to resist price hikes, which could push firms to delay raising prices as long as possible. Consumer prices cooled noticeably in February and March, prompting Trump to claim repeatedly on social media that there is 'NO INFLATION.' Inflation has fallen to nearly the 2% target set by the Federal Reserve, the agency charged with fighting higher prices. Yet grocery prices have jumped in two out of the past three months, despite Trump's claims. He has also said gas has fallen to $1.98 a gallon, which is below the measured average in any state. AAA said Monday that gas costs an average $3.14 a gallon nationwide. Advertisement On Monday, the White House said it has cut the tariff it imposed on Chinese goods from 145% to 30%, while China also sharply reduced its duties on U.S. goods. Both sides could add 24% tariffs after 90 days if they don't reach a broader agreement. The smaller import taxes will limit the damage to the U.S. economy, but combined with a 10% universal tariff already in place, plus larger import taxes on autos, steel, and aluminum, economists forecast they will still slow growth this year and worsen inflation. The Yale Budget Lab, for example, estimates that the average U.S. tariff will be nearly 18% even including the deal reached Monday between the U.S. and China. At that level, U.S. duties will be the highest since 1934. The Budget Lab calculates the tariffs will lift prices 1.7% and cost the average household about $2,800. And while Trump may tout his trade deals — such as the one with the United Kingdom reached last week — he has also said 'tariffs is the most beautiful word' in the dictionary, and is counting on revenue from duties to narrow the budget deficit, suggesting tariffs will likely remain high. The tariffs have also put the Federal Reserve in an exceedingly difficult spot, as Chair Jerome Powell acknowledged in a news conference last week. Powell said the duties have raised the risk of both higher inflation and higher unemployment, two challenges that rarely occur simultaneously. If unemployment rose, the Fed would typically cut rates to boost the economy, while if inflation worsened, the central bank would usually raise rates or leave them elevated. Advertisement
