The US consumer price index (CPI) rose 0.2% seasonally adjusted in April, bringing the 12-month inflation rate to 2.3%, its lowest since February 2021. The core CPI, excluding volatile food and energy prices, also increased 0.2%. However, some categories like egg prices took a hit, falling 12.7%.
The Trump tariffs remain a wild card in the inflation picture, as negotiations between now and summer continue to shape their impact. Despite this uncertainty, markets reacted little to the news, with stock futures pointing flat.
Experts attribute the subdued reading to the recent start of the tariff’s effect on the US economy. Robert Frick, corporate economist at Navy Federal Credit Union, notes that non-tariffed goods are still in the pipeline and may have absorbed some tariff costs for now.
Shelter prices pushed up the inflation gauge with a 0.3% gain, accounting for half of the overall move. Energy prices rebounded, while used vehicle prices dropped 0.5%. Egg prices tumbled 12.7%, but were still up 49.3% from last year.
The real average hourly earnings remained flat in April, but were up 1.4% year-over-year. Economists expect inflation numbers to perk up again in the summer months due to the easing of tariffs against China, although the degree of this effect is uncertain.
Markets now expect fewer interest rate cuts this year, with some traders pushing out the first cut to September. The Federal Reserve will release its producer price index reading on Thursday, which serves as a leading indicator for inflation.
Source: https://www.cnbc.com/2025/05/13/cpi-inflation-april-2025.html