The latest data from the Bureau of Labor Statistics released Wednesday morning indicates a moderation in US consumer price increases during April. The Consumer Price Index (CPI) saw a 0.3% rise over the previous month and a 3.4% increase over the prior year, marking a slight deceleration from March’s 3.5% annual gain and 0.4% month-over-month increase.
April’s monthly increase fell below economist forecasts of a 0.4% uptick, while the annual rise in prices matched estimates. On a “core” basis, which excludes the more volatile costs of food and gas, prices climbed 0.3% over the prior month and 3.6% over the last year—cooler than March’s data, but in line with economist expectations.
Following the data release, investors adjusted their expectations, now anticipating two 25 basis point rate cuts this year, down from the six cuts expected earlier. Market response was positive, with the 10-year Treasury yield falling approximately 6 basis points to trade around 4.38%.
Bankrate senior economist analyst Mark Hamrick noted the lack of a negative surprise this time, though he emphasized that headline and core inflation rates at 3.4% and 3.6%, respectively, remain high. He suggested that elevated interest rates would likely persist in the near term to combat inflation.
Source: BUREAU OF LABOR STATISTICS
Market reaction to the data included an increase in the probability of rate cuts at the Federal Reserve’s September meeting, with markets pricing in a roughly 53% chance, up from about 45% the previous month, according to data from the CME FedWatch Tool.
The inflation report highlighted notable trends, including a 5.5% increase in the shelter index on an annual basis, albeit slower than March’s rate. Rising shelter costs, particularly rent and owners’ equivalent rent (OER), contributed significantly to core inflation. Energy prices, driven by higher gas prices, continued to rise, with the index jumping 1.1% in April and 2.6% year-over-year.
The food index increased by 2.2% over the last year, with food prices remaining flat from March to April. Notable decreases were observed in categories such as used cars and trucks, household furnishings and operations, and new vehicles.
Overall, while the April data showed a moderation in price increases compared to previous months, inflationary pressures remain a concern, with certain sectors such as shelter and energy contributing to sustained high inflation rates.
Click here to download the official report released by the Bureau of Labor Statistics
