Inflation Slows to Lowest Rate Since 2021

April Inflation Overview

The Consumer Price Index (CPI) rose by 2.3% on an annual basis in April, marking the lowest inflation rate since February 2021. This was slightly below the 2.4% annual increase recorded in March and economists' expectations for the same. On a month-over-month basis, inflation increased by 0.2%, rebounding from a 0.1% decline in March but still under the forecasted 0.3%. The latest data suggests inflationary pressures have eased temporarily, even as tariff-related costs loom in the background.

Key Price Changes

Egg prices experienced a sharp 12.7% decline in April, driven by improved supply conditions following the earlier impact of avian flu outbreaks. This drop helped bring overall food prices down by 0.1% for the month, despite marginal increases in other food categories. Excluding volatile components such as food and energy, core inflation remained steady at 2.8% on an annual basis, mirroring March's reading. Shelter costs rose by 0.3% in April, accounting for half of the monthly increase in the overall CPI, while categories like apparel and airline fares saw declines.

Future Inflation Expectations

Economists anticipate tariff-related price pressures to build over the coming months as retailers pass on higher import costs to consumers. President Trump's recent tariff adjustments, including a 10% duty on imports across many sectors, are expected to contribute to gradual inflation increases. Projections suggest inflation could peak later in the year, potentially reaching an annual rate of 3.4% by the fourth quarter. However, the Federal Reserve is likely to maintain its cautious stance, keeping interest rates steady while monitoring the evolving inflationary landscape.