U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints, which could add fuel to financial market fears of a lengthy period of higher inflation.
The report from the Labor Department on Wednesday also showed a strong buildup of underlying price pressures, extending a stocks selloff on Wall Street. Most economists were, however, unwavering in their belief that the surge in prices would be temporary, noting that the main drivers of the bigger-than-expected inflation increase were hotels and airlines, industries that were hardest hit by the coronavirus pandemic.
Bottlenecks in the supply chain, which led to a record jump in prices of used cars and trucks last month, were expected to ease. Federal Reserve Chair Jerome Powell has similar views.