US consumer prices falls to 2.3% in April
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The news: The US consumer price index (CPI) eased to 2.3% in the 12 months through April, the slowest annual rate since early 2021 and came in short of forecasts that it would sit steady at 2.4%.
The numbers: Prices rose 2.3% in April from a year earlier, according to the Department of Labor, less than expected and the smallest change since February 2021. Shelter costs accounted for over half of the CPI’s gains, rising 0.3% in April.
Core CPI (excluding food and energy prices) rose at a 2.8% rate, rising more slowly than expected with 4 among the 72 Bloomberg forecasters polled who had pencilled in a 0.2% or less reading for the monthly gain.
Food prices were down 0.1%, with grocery costs dropping 0.4% - the biggest drop since September 2020. Among groceries, egg prices dropped some 12.7% on the month, the biggest fall since 1984.
The context: The data from the Bureau of Labor Statistics is the first CPI report that captures the tariffs including a doubling of fentanyl-related taxes on all Chinese imports to 20% and a 25% levy on imported cars and light trucks, imposed before President Donald Trump's April 2 "Liberation Day" announcement. The hit from Trump’s ‘reciprocal tariffs’ are expected to start showing up more significantly from May's CPI report.
Trump is expected to ramp up his pressure on the Federal Reserve to cut interest rates on the basis that he is bringing ‘Bidenflation’ under control. Last week Treasury Secretary Scott Bessent said that the Trump’s administration’s agenda was bearing fruit, citing the March CPI print.
The Fed kept its benchmark overnight interest rate unchanged at 4.25%-4.50% when it met last week.
The sources: US Bureau of Labor Statistics, Bloomberg
