US inflation eases to 3.4% in April
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The news: US inflation fell to 3.4% in April, in line with economists’ expectations and reversing a rise in consumer prices the month prior.
The numbers: Data from the US Bureau of Labor Statistics saw overall CPI climb 0.3% from the month prior and 3.4% from a year ago, with housing and fuel accounting for 70% of the increase.
The core consumer price index, which excludes food and energy costs, increased 0.3% from March, advancing 3.6% from one year ago, the lowest increase since April 2021.
The context: Cooling inflation data suggests the Federal Reserve’s efforts to keep interest rates higher are working to help inflation resume a downward trend. However, it is likely that Fed officials will want to see further evidence that inflation is inching toward the central bank’s 2% target before making any cuts.
Speaking in Amsterdam on Tuesday, Fed chief Jerome Powell said that inflation has been falling more slowly than expected, and that the rapid disinflation seen in 2023 has not carried through 2024. “We did not expect this to be a smooth road. But these [March inflation readings] were higher than I think anybody expected […] What that has told us is that we’ll need to be patient and let restrictive policy do its work.”
“I do think it’s really a question of keeping policy at the current rate for longer than had been thought,” Powell said.
The sources: US Bureau of Labor Statistics, Bloomberg
