WASHINGTON (AP) — Consumer inflation remained persistently high last month, boosted by gas, rents, auto insurance and other items, the government said Wednesday in a report that will likely give pause to the Federal Reserve as it considers how many —
WASHINGTON — Consumer inflation remained persistently high last month, boosted by gas, rents, auto insurance and other items, the government said Wednesday in a report that will likely give pause to the Federal Reserve as it considers how many — or even whether — to cut interest rates this year.
Fed officials have made clear that with the economy healthy, they’re in no rush to cut their benchmark rate despite their earlier projections that they would do so three times this year. On Wall Street, traders sent stock prices tumbling and bond yields rising, reflecting fear that the Fed may delay interest rate cuts indefinitely. The broad S&P 500 stock index sank 1% in early trading.
The costs of owning a vehicle were a key reason why prices jumped last month: Auto insurance surged 2.6% just in March and are up a dramatic 22% from a year ago. That increase reflects, in part, the rise in new-car prices over the past two years. The chronically elevated inflation so far this year suggests that American consumers, on average, remain confident enough to keep spending despite steady price increases, said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, a consulting firm. Likewise, she said, the surge in auto insurance and repair costs reflect the previous sharp increases in auto sales prices.
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