Inflation in the US remains very high – prices are going up and up

Inflation is still an issue in the USA that is causing major problems for politicians and above all for the citizens. In April, inflation in the United States weakened after months of increases – albeit only very slightly. Consumer prices rose 8.3 percent year-on-year, the Department of Labor said in Washington on Wednesday.

This means that inflation is only a little removed from the highest level in a good 40 years, which it marked in March at 8.5 percent. The US dollar and capital market interest rates in the US rose as an initial reaction. This suggests that the financial markets are expecting further and significant interest rate hikes by the US Federal Reserve. The central bank is already fighting the high inflation with a tighter monetary policy.

Inflation in the US was initially fueled by Corona

Inflation in the USA had already risen last year, which was mainly due to the economic effects of the corona pandemic. At that time, inflation was mainly driven by increased demand for goods coupled with bottlenecks in international supply chains and a shortage of workers.

In the past few months, the Ukraine crisis and finally the Russian war of aggression against the neighboring country, which started on February 24, led to a sharp increase in the price of oil and thus also of petrol.

In view of the high inflation in recent months, the Fed has already raised the key interest rate twice: in March by 0.25 percentage points and then last week by 0.5 points. The key interest rate is thus in a range between 0.75 and 1.0 percent.

Inflation is a huge political problem for President Joe Biden, whose Democrats face a bitter defeat in November’s midterm elections. The significant price increase is seen as a reason for the President’s poor poll numbers. On Tuesday, Biden assured that the fight against inflation was his administration’s “top priority” in domestic politics.

The key interest rate in Europe will probably not remain at zero percent for much longer

In Europe, the key interest rate is still zero percent – ​​but that too could change, because citizens and businesses on our continent are also suffering from rising prices. More than six years after the European Central Bank (ECB) lowered the key interest rate to the current level, the summer could bring the turnaround in interest rates. “Some time” after the expected end of the ECB’s bond purchases at the beginning of the third quarter, the central bank will raise the key interest rate, said ECB President Christine Lagarde on Wednesday and spoke of “a few weeks” in this regard.

The pressure on the ECB to raise key interest rates had increased recently due to the high inflation rate in the euro area. In April, inflation hit a record high of 7.5 percent. The ECB is actually aiming for a value of two percent. In Great Britain, key interest rates had recently also been raised.

Watch the video: Prices are rising – and so are the supermarkets. But to what extent are customers being tricked by the food industry? How can you save money in times like this? These and other questions are answered here.