In February, the annual inflation figures stood at 6 per cent, already a steep decline from its peak of 9.1 per cent in June…reports Asian Lite News
US annual inflation reduced to 5 per cent last month, official figures revealed, the slowest pace for price increases since 2021 they first began to climb, according to a media report.
March’s monthly consumer price index (CPI), which measures the price of a basket of goods and services, showed the rate easing off over the last year, The Guardian reported.
In February, the annual inflation figures stood at 6 per cent, already a steep decline from its peak of 9.1 per cent in June, the report said.
But core inflation, which does not include volatile energy and food prices, has remained steady – a sign that the slowing pace could be attributed to comparisons against soaring gas prices a year ago, near the beginning of Russia’s invasion of Ukraine. March’s core inflation rate over the last year was 5.6 per cent, compared to February’s 5.5 per cent.
Despite the overall cooling, the closely-watched inflation report will probably not sway officials at the Federal Reserve, who have been eyeing further interest rate hikes in their aggressive campaign to lower inflation, The Guardian reported.
Even as the overall inflation rate is on a downward trend, economists are expecting the Fed to continue raising interest rates, despite the volatility increased rates could bring to the economy, The Guardian reported.
In March, the Fed increased rates by a quarter point to a range of 4.75 per cent to 5 per cent, a move largely seen as both assertive and conciliatory in the direct aftermath of the collapse of Silicon Valley Bank (SVB). The Fed has increased interest rates nine consecutive times over the last year, raising rates by a quarter point up to three-quarter points at a time.
In March, the Fed chair, Jerome Powell, said that the central bank was closely monitoring the impact of SVB’s collapse but was still adamant on getting inflation down to a target goal of 2 per cent.
IMF urges tighter fiscal policy
The IMF has urged fiscal policymakers to adopt tighter fiscal policies to help central banks fight inflation.
“Amid high inflation, tightening financing conditions, and elevated debt, policymakers should prioritise keeping fiscal policy consistent with central bank policies to promote price and financial stability,” the IMF said on Wednesday in a blog as it released its latest Fiscal Monitor.
The report argued that many countries will need a tight fiscal stance to support the ongoing disinflation process — especially if high inflation proves more persistent, Xinhua news agency reported.
“Tighter fiscal policy would allow central banks to increase interest rates by less than they otherwise would, which would help contain borrowing costs for governments and keep financial vulnerabilities in check,” said the blog, authored by IMF economist Francesca Caselli and her colleagues.
Meanwhile, the IMF noted that tighter fiscal policies require “better targeted safety nets to protect the most vulnerable households,” including addressing food insecurity, while containing overall spending growth.
According to the newly released Fiscal Monitor, following 2020’s historic surge in public debt to nearly 100 per cent of GDP because of economic contraction and massive government support, fiscal deficits have since declined.
In the last two years, global debt posted the steepest decline in decades and stood at 92 per cent of GDP at the end of last year, which is still about 8 percentage points above pre-pandemic projections.