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US inflation wavers near a 40-year high

The US inflation rate has fallen to 8.3%, but the Consumer Price Index continues to flirt with catastrophic 40-year highs.

The index also revealed that costs had risen by a monthly rate of 0.3% in April after having risen 1.2% in March. This decline is the first month to month inflation rate fall since August 2021.

US president Joe Biden said that it was heartening to see that annual inflation moderated in April but that it remained unacceptably high.

"I'm taking inflation very seriously and it's my top domestic priority," Biden said.

The president went on to blame the pandemic and the war in Ukraine for the historical inflation being incurred in countries all over the world.

Likewise, the Federal Reserve attributed the current inflationary scourge to pandemic related supply chain imbalances, higher energy prices and broader price pressures.

Of note, the food index rose 0.9% in April, the 17th consecutive monthly increase.

There were huge monthly inflationary spikes for dairy products, non-alcoholic beverages, meats, poultry, fish, eggs, and baked products.  The unadjusted inflation rate for the 12-months to April 2022 for food sat at 9.4%.

More dire again, the annual inflation rate of energy commodities was 44.7%; fuel oil and petrol were 80.5% and 43.6% respectively.

On the back of the latest figures, the Nasdaq slumped 3% and the S&P500 1.6%.

However, as market turmoil continues to take hold, T. Price Rowe chief international economist Nikolaj Schmidt has called for calm.

"The current inflation surge rests on a few moving pieces but is mostly cyclical and central banks have the ability and willingness to address the problem at hand," Schmidt said.

"Contrary to some reports, we are not on the cusp of a return to the 1970s inflation inferno."

Schmidt added that aside from supply-side issues central banks were equipped with the tools to control most of the inflationary causes seen today.

He said: "Inflation is a social choice and by choosing independent central banks with clear inflation objectives and accountability, we have made the choice to keep inflation controlled."

Read more: Nikolaj SchmidtConsumer Price IndexCPIFederal ReserveNasdaqS&PT. Price Rowe