New York: 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 cuts growth projection for India ‘because it got it wrong before’
Washington: The International Monetary Fund on Tuesday hailed India as “one of the bright spots” in the global economy even as it trimmed its projected growth for 2023 by 0.2 percentage points, but only because, it acknowledged, it had previously underestimated the country’s performance during the Covid-19 pandemic years of 2020-2021.
In other words, the Indian economy had fared far better in those years than the IMF had estimated and, therefore, had “less room for catching up” than the rest of the world.
The fund’s had a grim warning for the global economy though: while the recovery from pandemic and the war in Ukraine will continue, although at a rate slower than projected before, because of recent turmoil in the banking sector — shutting down of two regional banks in the US and the distress sale of Switzerland’s Credit Suisse — the “fog around the world economic outlook has thickened”.
The fund’s World Economic Outlook, a quarterly report on the state of the global economy, cut the projected growth for the world by 0.1 per cent and said the slowdown will take place in advanced economies, chiefly the UK and the euro area. The banking system turmoil, however, will hit emerging markets and developing economies the hardest, if it deepens.
“We are therefore entering a tricky phase during which economic growth remains lacklustre by historical standards, financial risks have risen, yet inflation has not yet decisively turned the corner,” Pierre-Olivier Gourinchas, the fund’s economic counsellor and the director of research, wrote ina blog accompanying the World Economic Outlook.
The economic outlook cuts India’s growth projected by 0.2 percentage points from its January report to 5.9 per cent for 2023 and then it will rebound back to 6.3 per cent in 2024.