Inflation moderated on an annual basis for the first time in months in April, but the 8.3% annual increase in the consumer price index remained uncomfortably fast – and a closely watched index which subtracts volatile food and fuel costs actually accelerated.

The takeaway is that the pressures that have kept inflation high for months remain strong, a challenge for households trying to weather rising spending and for the White House and Federal Reserve as they try to put the economy on a more stable path.

Inflation is starting to moderate on an annual basis – it climbed 8.5% even faster in March. April’s slowdown was the first cooling in months, and it came partly because gasoline prices fell last month and partly because of a statistical quirk. Annual price increases are now measured against the high price readings of last spring, when inflation started to take off. The high base makes annual increases less severe.

The reality that annual inflation may have peaked will give the White House and the Fed a positive talking point and a dose of comfort. But the good news is undermined by the fact that the so-called core price measure – the one that removes the cost of groceries and gas – rose 0.6% in April from the previous month, faster than its 0.3% rise in March. Central bankers and economists are watching this metric closely as they try to gauge the direction of inflation.

Policymakers still have a long way to go to bring price increases back to more normal and stable levels, and Friday’s report should keep them focused on trying to rein in inflation that persists near its fastest pace. for 40 years.

“There’s not much to reassure the Fed in this release,” wrote Brian Coulton, chief economist at Fitch, in a research note following the report.

Economists expect price increases to slow somewhat this year: the question is how much and how fast they will come down. Many analysts expect to see slower price increases or even outright price declines on many goods, but those predictions are looking increasingly uncertain. Lockdowns in China and war in Ukraine threaten to exacerbate supply shortages of semiconductor chips, raw materials and other important products.

“There are persistent problems in supply chains,” said Matthew Luzzetti, chief US economist at Deutsche Bank. “And the most recent developments have not been positive.”

The outlook for the auto market, for example, remains hazy as there are signs that used-vehicle supply shortages are easing, but chip shortages persist and companies continue to struggle to finish building vehicles.

Used cars and trucks fell in price in April from the previous month, but less than they fell the previous month. Prices for auto parts fell in March, but resumed their monthly rise in April. New car prices also accelerated after a lull, climbing 1.7% from the previous month.

Prices for services are now rising rapidly as rents climb rapidly and labor shortages lead to higher wages and higher prices for restaurant meals and other labor-intensive purchases. If this continues, it could keep inflation high even if supply issues are resolved.

Rents rose 0.6% in April from March, and a measure of housing costs that uses rents to estimate the cost of owned accommodation rose 0.5% from 0.4% in the month previous. The recovery in housing costs is particularly important, as they account for about a third of the overall inflation index.

“Nationally generated inflationary pressures remain strong,” wrote Andrew Hunter, senior US economist at Capital Economics, following the report.

While inflation is likely to remain high, the Fed is raising interest rates in an attempt to permanently prevent inflation from spiraling out of control.

After a full year of unusually rapid price increases, household and investor expectations for future price increases have been crawling higherwhich could help perpetuate rapid price increases as households and businesses adjust their behavior, demanding larger increases and charging more for goods and services.

Fed policymakers raised their key interest rate for the first time since 2018 in March, then followed up with the biggest increase since 2000 when they met last week.

By making borrowing more expensive, officials hope to slow spending and rapid hiring, which could help supply catch up with demand. As the economy returns to equilibrium, inflation should fall.

Central bankers are hoping their policies will temper economic growth without pushing up unemployment or plunging America into a recession. But officials acknowledged it would be difficult to let the economy down gently and hinted they would be prepared to inflict economic pain if that’s what it takes to fight high inflation.