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Inflationary pressures ease in April as consumer prices rise at slowest pace in 3 months
U.S. consumer price increases cooled during April, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.
The Consumer Price Index (CPI) increased 0.3% month-on-month and 3.4% year-on-year in April, a slight slowdown from the previous month. 3.5% annual price gain in March and an increase of 0.4% month on month.
April’s monthly increase was lower than economists’ forecasts of a 0.4% increase. The annual price increase matched estimates, according to Bloomberg data, and marked the smallest gain in three months.
On a “basic” basis, which excludes the more volatile costs of food and gas, prices in April rose 0.3% compared to the previous month and 3.6% compared to last year – cooler than data from March. Both measures met economists’ expectations.
Investors now anticipate two 25 basis point cuts this year, down from the six cuts expected at the start of the year, according to updated data from Bloomberg.
Markets rose following the data release, with the 10-year Treasury yield (^ TNX) falling about 6 basis points to trade around 4.38%.
“The lack of an unpleasant surprise this time is welcome,” Bankrate senior economist analyst Mark Hamrick wrote in reaction to the print. Still, Hamrick added, “with the annual increase of 3.4% and 3.6% in core (excluding food and energy), these remain annoyingly high. short term.”
Following the release of the data, markets were predicting a roughly 53% chance that the Federal Reserve would begin cutting rates at its September meeting, according to data from the CME FedWatch tool. This represents about a 45% chance in the previous month.
See more information: What the Fed’s Rate Decision Means for Bank Accounts, CDs, Loans and Credit Cards
Shelter, gas prices remain sticky
Notable indications of the inflation print include the shelter index, which rose 5.5% on an unadjusted annual basis, a slowdown from March. The index rose 0.4% month over month and was the biggest factor in the monthly increase in base prices, according to the BLS.
Sticky Shelter Inflation is largely responsible for the higher underlying inflation readings, according to economists.
The rent and owner-equivalent rent (OER) index each rose 0.4% month-on-month, matching March’s increase. Owner’s equivalent rent is the hypothetical rent a landlord would pay for the same property.
Accommodation away from home decreased 0.2% in April, after rising 0.1% in March.
Federal Reserve Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, May 1, 2024. (AP Photo/Susan Walsh, File) (ASSOCIATED PRESS)
Energy prices continued to rise in April, driven by higher gas prices. The index jumped another 1.1% last month, matching March’s increase. On an annual basis, the index rose 2.6%.
The story continues
Gas prices rose 2.8% from March to April, after rising 1.7% the previous month.
The food index increased by 2.2% in April over the past year, with food prices stable from March to April. The food at home index fell 0.2% in the month, while food away from home rose another 0.3%.
Other indices that increased in April were motor vehicle insurance, health care, clothing and personal care. Motor vehicle insurance, highlighted in the March report after the category jumped 2.6%, rose another 1.8% in April.
The indexes for used cars and trucks, household furniture and operations, and new vehicles were among those that declined during the month, according to the BLS.
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on X @allie_canal, linkedin, and email her at alexandra.canal@yahoofinance.com.
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