Soaring inflation slowed in April. Will price-weary shoppers get a bit of relief?

Inflation stayed elevated in April but eased off its 40-year high, signaling that a stomach-churning surge in consumer prices since last summer may have peaked.

The consumer price index increased 8.3% annually, down from 8.5% in March, as a drop in gasoline prices offset a continuing run-up in food, rent and other costs, the Labor Department said Wednesday. March’s yearly advance marked the fastest since December 1981.

April’s pullback in the annual reading was the first since last August and halted five straight months of 40-year highs. But hold off on that shopping spree. Overall consumer prices edged up 0.3% from March.

Much of the slowdown in the yearly measure reflected a 6.1% monthly drop in gas prices. Pump costs, however, shot higher again this month. Regular unleaded hit a record $4.37 a gallon Tuesday, up from $4.12 a month ago, according to AAA.

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Rick Kiphut, of Memphis, Tennessee, his wife and two teenage daughters planned to tow their camper to the Great Lakes in Michigan in July, as they did last year, for a 10-day vacation. But the 3,300-mile trip will cost an extra $550 or so in gas, so they decided to skip it this year.

“It’s not fiscally responsible,” he says.

Annual inflation slowed in April partly because prices began ratcheting higher a year ago, making the latest numbers appear not as outsized by comparison.

One worrisome sign: Core consumer prices, which exclude volatile food and energy items, increased 0.6% from the prior month, more sharply than expected. The annual rise eased to 6.2% from a four-decade high of 6.5% in March.

"The falls in headline and core inflation in April should mark the beginning of a sustained decline," economist Andrew Hunter of Capital Economics wrote in a note to clients. But the monthly rise in core prices "indicates that underlying inflation pressures are stronger than we had expected."

Tuesday, President Joe Biden called inflation the nation's top economic challenge, blaming the twin crises of a "once-in-a-century pandemic" and the war in Ukraine.

"I want every American to know that I’m taking inflation very seriously, and it’s my top domestic priority," Biden said. 

As the pandemic eased this year, consumer purchases started to shift from goods to services, such as dining out and traveling, says Wells Fargo economist Sam Bullard. The development started to mitigate the supply chain bottlenecks behind much of the inflation spike.

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That has begun moderating increases in the price of furniture, appliances and other items. Used car prices dipped 0.4% in April after a 3.8% decline the previous month, though they’re still up 22.7% from a year ago. Clothing prices fell 0.8% monthly, lowering the annual rise to 5.4%.

Grocery costs jumped 1% monthly and 10.8% from a year ago. Air fares surged 18.6% in April and were up 33.3% the past 12 months. Rent climbed 0.6% monthly and 4.8% from a year ago.

In other words, hurdles still loom. COVID-19-related factory shutdowns in China raised the risk of further supply disruptions, Bullard says.

Russia’s war in Ukraine pinches global oil and food supplies and intensifies supply snarls, pushing up prices. Ukraine accounts for about 8% of global wheat exports. Breakfast cereal prices rose 2.4% in April and are up 12.1% from a year ago, and bread costs increased 2% and 9.1% yearly.

Proteins kept marching higher. Pork chop prices rose 1.9% monthly and 14% annually. Chicken costs increased 3.4% and 16.4% over the year. Fish was up 0.9% and 13% annually.

Julie Malkin of Toledo, Ohio, says she and her family replaced grilling favorites such as pork chops, steak, salmon and shrimp with burgers, sloppy joes, homemade chili and pasta.

“Prices are ridiculous,” she says. “It’s frustrating.”

Consumers’ pivot to more spending on services, along with worker shortages that propelled wages higher, drive up a different set of prices. Besides the leap in air fares, hotel rates increased 1.7%, pushing the yearly rise to 19.7%.

Barclays expects annual inflation to ease to a still-high 5.7% by year’s end and 2% – the Federal Reserve’s target – by the end of 2023.

"The eventual descent in the pace of inflation will be very gradual," says economist Kathy Bostjancic of Oxford Economics.

To curtail inflation, the Fed raised its key short-term interest rate by a half percentage point last week – the most in 22 years – and tentatively plans two more hikes in June and July.

Wednesday's report will probably "strengthen the Fed's resolve" to follow through with those rate increases, says Hunter of Capital Economics.

Contributing: Michael Collins