The Bureau of Labor Statistics released the consumer price index for April. The results were a surprise. After over a year of relatively high inflation, the pace slowed considerably. Prices in April were only 0.4% higher than in March and only 4.9% from April 2022. While this is still above the Federal Reserve’s target of 2% inflation, the pace is low enough that the Fed may stop its aggressive rate hikes, which many were concerned might push America into a recession.

Among items in the CPI, two had shocking increases in price – food served at businesses and schools. Food at elementary and secondary schools soared 296% in April compared to April last year, and food at employee sites and schools spiked 131% year over year. (Here are metropolitan areas with the highest food inflation.)

According to CBS, in a recent study, “the School Nutrition Association found 60.5% of school meal program directors said they had increased prices for meals for the current school year.” The cost of this is passed on to the government. The question is whether this means any of these programs will need to be curtailed.

What does the CPI news mean in a broader context? It cuts two ways. On a positive note, inflation was robbing Americans of their purchasing power and businesses of their profits, which moved the economy in the direction of recession. The lower inflation then would be a welcome sign. However, the drop in the CPI also means the economy began to slow several weeks ago. A recession that might have been avoided if interest rates were lower might have already begun.

The increase in CPI would have been even lower if the prices of several items did not keep the rapid pace higher. A broad array of items – shelter, new vehicles, motor vehicle insurance, recreation, and household furnishings and operations. Car prices, in particular, have been pressured higher for months because of a low supply of auto parts and a sluggish supply chain. The food index, too, increased by 7.7% year over year but was unchanged compared to last month. (Shelter inflation has been higher in some cities – particularly, the cost of housing has skyrocketed in these major U.S. cities.)

Click here to see school lunches soar in price.