April CPI Report: Inflation Slows to 2.3%, Lowest Rate Since 2021
The April CPI report brought a welcome surprise as annual inflation dropped to 2.3%, marking its lowest level since February 2021, according to the Bureau of Labor Statistics. This decline offers a temporary breather for consumers and policymakers, though underlying economic pressures remain.
What the CPI Report Says
The consumer price index (CPI) rose 0.2% for April, on a seasonally adjusted basis, matching expectations. Year-over-year, inflation came in at 2.3%, slightly lower than the 2.4% economists predicted.
The core CPI, which excludes volatile food and energy prices, also rose 0.2% in April and held steady at 2.8% annually.
🔹 Shelter costs increased 0.3%, still a primary driver of inflation.
🔹 Egg prices dropped by 12.7%, though they remain 49.3% higher year-over-year.
🔹 Used cars declined by 0.5%, while apparel saw a 0.2% decrease.
🔹 Energy prices rebounded with a 0.7% gain, while food prices slipped 0.1%.
🇺🇸 Trump Tariffs: The Wild Card in the Inflation Picture
While the April inflation report appeared tame, analysts warned of looming inflationary pressure tied to Trump’s new tariffs.
The former president’s “liberation day” policy introduced 10% duties on all imports, with reciprocal tariffs in play. However, a 90-day pause on tariffs against China has eased fears—for now.
Economists like Aichi Amemiya from Nomura say inflation may rise in May and beyond due to these trade shifts, although weak demand and inventory drawdowns might soften the impact.
Fed Rate Cuts in Question
Markets had been betting on Federal Reserve rate cuts starting in June. But with inflation still hovering above the Fed’s 2% target, and tariff uncertainty, those expectations have shifted.
Now, most traders expect the first rate cut no earlier than September, with two reductions likely in 2025.
Real Wages and the Bigger Picture
Despite the CPI increase, real average hourly earnings were flat in April, and up 1.4% from last year. The economy remains steady, but the tariff ripple effect could change that later this summer.
The Commerce Department’s inflation gauge, favored by the Fed, may offer deeper insight. Its producer price index (PPI) report due Thursday is expected to reveal further trends.
Inflation 2025: What to Watch in New York and Nationwide
With New York among the states feeling the pinch of high shelter costs and food volatility, the trajectory of inflation remains a critical part of the 2025 economy news cycle.
Source: CNBC
