Economy - US inflation rose sharply in April - by 4,2 percent

Prices in the US rose much faster than expected in April. They climbed 4,2 percent compared to the same month last year, as the Department of Labor in Washington announced on Wednesday. Experts polled by Reuters had only 3,6 percent on the slip, after 2,6 percent in March.

On the previous month, too, the increase in April was far higher than expected at 0,8 percent. Economists had only expected 0,2 percent. Fears of higher inflation have weighed on the stock markets for days. The German leading index DAX turned into the red after the data. The euro fell against the dollar.

Experts believe it is possible that the inflation rate will continue to rise in the coming months. One reason for this is a statistical effect: a year ago, prices were low due to the corona-related economic downturn. "The inflation expectations that have recently been in focus will be further fueled because the monthly changes are also well above expectations," commented Helaba expert Ralf Umlauf. In the medium and long term, the question arises whether the combined monetary and fiscal policy impulse in the USA will have no lasting impact on price developments.

Fed: inflation is only picking up temporarily

The US Federal Reserve (Fed) is closely monitoring price developments. However, it assumes that inflation will only pick up temporarily because of the statistical effects. The Fed is paying particular attention to price changes in private consumer spending, excluding energy and food costs. This rate was most recently 1,8 percent and thus below the monetary authorities' target of 2,0 percent.

The central bank supports the economy hit by the Corona crisis with monthly cash injections of 120 billion dollars (about 99 billion euros). It intends to hold on to this until substantial progress has been made on price stability and unemployment. (Reuters)