Last month, overall U.S. inflation came in at 4.9 percent. While it is the slowest since April 2021, it is still above the 2 percent Fed target rate.

Inflation clocked in at 5 percent in March.

Grocery prices eased for the second consecutive month; the cost of rent also slowed its rise. Prices for airline fares and hotel rooms plummeted, Al Jazeera reported. 

Gasoline prices rose 3 percent, pushing overall energy prices up by 0.6 percent. The cost of used cars climbed 4.4 percent, although the cost of new vehicles declined. Restaurant menu prices continued to rise and the cost of baby food and formula shot up a record amount.

The overall cost of imports edged up 0.4 percent; economists polled by Dow Jones had expected a 0.3-percent bump.

Service prices, excluding housing and energy, grew at 0.1 percent in April, their slowest month-to-month pace since last summer.

Wages, a driver of service prices, grew between 4 and 5 percent through the first four months of this year, too fast a pace to bring inflation closer to the U.S. Federal Reserve’s 2-percent target.

Excluding housing, energy, and food, overall prices grew by only 3.7 percent in April, year on year, tantalizingly close to the Fed’s 2-percent target.

Core inflation, screening out energy and food costs, ran at 5.5 percent, year on year, and ticked up 0.4 percent in April, the same as in March. April marked the fifth straight month in which core inflation gained at least 0.4 percent.

Core inflation is seen as a more accurate measure of inflation’s breadth across the economy as well as its longer-term trend.

Although inflation slowed last month, it did so to a lesser degree than in recent months. Prices rose 6.4 percent in January, 6.0 percent in February, and 5.0 percent in March.

“This is a story of still-sticky inflation at an elevated level,” Blerina Uruci, T. Rowe Price’s chief economist for fixed income investments, said in comments quoted by Al Jazeera. “This report pushes the [U.S. Federal Reserve] to keep [interest] rates high this year.”

However, although the Fed may not cut rates this year, many economists say the new inflation reading gives the Fed room to at least stop raising them.

“A quick read would indicate a tilt towards some potential further tightening of monetary policy,” Gregory Daco, chief economist at EY, said to Bloomberg, “but if you look at the underlying details, they mostly point towards the higher likelihood of a pause.”

As of 11 May, markets were pricing in a 97-percent chance of a pause.

TREND FORECAST: The banking crisis has boosted the odds the Fed can pause, as tighter credit conditions are cutting the number of new loans, as we reported in “Loan Availability Has Tightened in Key Markets, Fed Report Shows” (25 Apr 2023). However, as we detail in our ECONOMIC OVERVIEW section of this issue’s Trends Journal, the blowback from the Feds is that there will be more interest rate hikes on the near horizon. Thus, it is a guessing game.

Fewer loans can have the same economy-shrinking effect as a rate hike by the central bank. 

Interest-rate futures markets are still giving odds the Fed will cut rates this year, despite Fed officials’ repeated assurances that will not happen.

“I do not see in my baseline forecast any reason to cut interest rates this year,” John Williams, president of the Federal Reserve Bank of New York, told a recent gathering of the Economic Club of New York.

“While the April CPI report isn’t exactly reassuring, it also won’t jolt Fed officials into signaling another rate hike in June, given their expectation that the full disinflationary impact from tighter credit conditions has yet to show up,” Bloomberg economists wrote in a note. 

“However, the slow progress in reducing core inflation highlights how unlikely it is that the Fed will cut rates this year,” they said.

TREND FORECAST: If inflation in May shows little or no improvement, the Fed will be strongly motivated to consider raising its interest rate yet again, which would raise housing costs and push the economy closer to a recession that might, finally, do what the Fed has sought to do: hope to lower inflation. 


For the first time in five months, overall prices rose in the 19-country Eurozone in April, ticking up to 7 percent from 6.9 in March.

The cost of food jumped 13.6 percent, year on year, with industrial goods not related to energy costing 6.2 percent more.

Service prices also added 0.1 percent, moving up to a 5.2-percent pace.

The core inflation rate, which ignores food and energy prices, slipped from 5.7 percent in March to 5.6 in April. Energy prices have declined sharply in recent months, indicating that food is now inflation’s chief fuel.

Latvia again saw the region’s worst inflation, at 15 percent. Inflation in Germany, Europe’s largest economy, slipped from 7.8 percent in March to 7.6 percent last month. In France, consumer prices increased by 6.9 percent in April compared to 6.7 percent in March.

The revised inflation rate increases the chances that the European Central Bank (ECB) will lift its key interest rate when it meets in June, economists said. 

ECB president Christine Lagarde affirmed that more rate increases are in store.

“The ECB is on a journey to fight inflation and the fight will only be over when we have sufficient confidence that we will reach the 2-percent [inflation rate] in the medium term,” she said in an interview with Japan’s NHK television on 11 May.

Lagarde made the remark after a new ECB survey showed a dramatic increase in Europe’s consumers’ expectations that inflation will run hotter longer, mirroring a similar survey result in the U.S. (See “Europeans More Pessimistic About Inflation, Survey Finds” in this issue.)

The region’s most formidable challenge is to bring inflation to heel without causing a recession, the International Monetary Fund has said.

PUBLISHER’S NOTE: In a historic act of central bankster blindness, the ECB—like the U.S. Federal Reserve—waited to acknowledge inflation’s persistence until long after every other economic observer knew it would not go away by itself.

Through much of 2020, Europe’s inflation rate was negative. When it ticked up to 1.6 percent in April 2021, ECB president Christine Lagarde shrugged it off.

Rising prices “are of a temporary nature” and inflation will return to modest levels in 2022, she said in comments quoted by the Financial Times. 

“Underlying factors and fundamentals are certainly not there to let us… forecast that inflation will stay at these levels,” she said.

By September, inflation’s pace had more than doubled to 3.4 percent but Lagarde was unmoved, echoing the U.S. Federal Reserve’s position that rising prices were a blip caused by tangled supply chains.

Wait a while, those kinks will sort themselves out, and prices will deflate like a leaky balloon, she assured Europeans.

“After doing a lot of soul-searching” about its view that inflation will ease next year, the bank’s policy committee decided to leave policies unchanged, including its benchmark interest rate of -.50 percent.

Lagarde also made a commitment that the ECB would not raise the interest rate any time in 2022.

Holding to that view, in late November Lagarde declared that it would be “wrong” to raise interest rates now because inflation will begin to cool by the time the new rates would have a chance to impact the economy.

Last December, Lagarde went farther out on her limb, predicting that inflation would fall to the bank’s 2-percent target rate by the end of 2022 and settle at 1.8 percent through 2023 and 2024. 

Two months later, in February 2022, Philip Lane, the ECB’s chief economist, began to turn the ship around.

Inflation in the Eurozone is unlikely to fall to the bank’s 2-percent target rate until at least 2024, he said.

Shortly after, Lagarde and other bank officials began hedging their comments, resulting in a comment in the spring to lift interest rates.

In June, the ECB took its interest rate out of negative territory for the first time since 2014, raising it to zero with hints that another increase will come in September.

TREND FORECAST: Now, as the central bank is scrambling to catch up with inflation, the Eurozone is sinking deeper into Dragflation, our Top 2022 Trend defined by rising prices and shrinking economic productivity.

The energy crisis created by the Ukraine war and Western sanctions will prolong not only inflation, but also the continent’s recession, realizing the ECB’s fears that inflation will become embedded across the economy.

Again the reality is simple: The higher interest rates rise, the deeper the EU economy and equity markets will fall.


In March, inflation in Great Britain ran at an annual rate of 10.1 percent, making it the only nation in the western European region where prices are rising by double digits.

The rate edged down from 10.4 percent in February but analysts had expected March’s pace to slip to 9.8 percent.

Energy costs, food, and housing put the most pressure on prices, the Office for National Statistics said.

The price of olive oil shot up 49 percent, milk 38 percent.

Austria had the next worst inflation in the region at 9.2 percent; Italy clocked in at 8.2 percent. The lowest was 3.1 percent in Spain.


Although Europe’s inflation rate has tumbled from a record 10.6 percent last October to 7 percent in April, Europeans are less optimistic that rising prices can be contained, the latest monthly survey by the European Central Bank (ECB) has found.

Inflation will be at 5 percent a year from now, respondents said, compared with 4.6 percent foreseen last month. In three years, inflation will still be at 2.9 percent; in April’s survey, the expectation was 2.4 percent.

The cost of alcohol, food, and tobacco rose at a 14.9-percent annual rate in April, continuing its 10-month streak of double-digit increases.

Wages grew by 5.7 percent in 2022’s final quarter, year on year, a record pace but still below the pace at which prices are increasing.

“As long as inflation, wage growth, and inflation expectations remain high and sticky, the ECB is going to err on the hawkish side,” research chief Frederik Ducrozet at Pictet Wealth Management said to the Financial Times.

“The main justification for [the ECB continuing to raise interest rates] would be that the risk of overdoing is less than the risk of doing too little,” he noted.

The ECB has raised rates seven times since last June and is widely expected to add another half a point at its meeting next month.

TRENDPOST: Because the ECB was late to acknowledge inflation’s persistence – even later than the U.S. Federal Reserve – it now has to move further faster to catch up to inflation.

The central bank will raise rates at least one more time and will risk a Dragflation: European economies, as the data reveals, will sink into recession as inflation continues to rise. 


The cost of fresh produce, dairy, and other perishable food items rocketed up 17.8 percent in April, year over year, and canned and processed foods’ cost climbed 12.9 percent, according to the British Retail Consortium (BRC), a trade group of supermarkets.

The price of food and beverages has reached a 45-year high, government figures showed.

Although inflation slowed slightly last month for clothing, footwear, and furniture, “food prices remained elevated given ongoing cost pressures throughout the supply chain,” BRC CEO Helen Dickinson told Sky News.

Inflation slowed in other categories due in large part to heavy discounting by retailers, the Russian news service RT reported.

Britain’s food banks have given out almost three million food packages over the past 12 months, with the number provided to children topping one million for the first time, the nonprofit Trussell Trust said.

Huw Pill, chief economist for the Bank of England, “stated earlier that British households and businesses needed to accept that they are poorer and should stop asking for wage increases and pushing prices higher,” according to RT.

TREND FORECAST: On Thursday 11 May 2023, the Bank of England raised interest rate 0.25 percentage points to 4.5 percent… which in real terms is negative interest rates considering the soaring inflation rate. Yet, even with the low rate hike, the nation’s GDP slump will continue as it costs more to borrow in an economic climate when lower interest rates are still pushing economic growth down. And as we have noted, despite the economic hardship inflicted on its society, the British government continues to send billions of dollars of weaponry to keep bloodying the Ukraine killing fields as its people can’t afford to live. 

Therefore, we forecast a continuing deterioration of the U.K. economy.

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