U.S. inflation eased in April as the consumer-price index rose 3.4% from a year ago. Core prices, excluding food and energy items, climbed 3.6% annually, the lowest year-over-year increase since April 2021 and were in line with economist expectations.
New data from the Bureau of Labor Statistics showed the 3.4% rise in prices in April is down a bit from 3.5% in March, and the shift follows months of hotter-than-expected reports. Prices rose 0.3% compared with the month before.
In a statement, the Bureau of Labor Statistics said the index for shelter rose in April, as did gasoline. “Combined, these two indexes contribute over 70% of the monthly increase in the index for all items,” the release stated. The energy index rose 1.1% in April, while the food index was unchanged.
The all items, less food and energy, index rose 3.6% during the last 12 months. The energy index increased 2.6% for the 12 months ending in April. The food index increased 2.2%.
Indexes that increased in April include shelter, motor vehicle insurance, medical care, apparel and personal care. The indexes for used cars and trucks, household furnishings and operations, and new vehicles were among those that decreased over the month.
According to reporting by The Wall Street Journal, investors saw positive signs in the report that the Federal Reserve’s efforts to contain inflation are slowing the U.S. economy. The yields on 10-year Treasury bonds, which fall as prices rise, dropped to to 4.354%. Stocks and bonds have rallied this month after jobs data showed cooling in the labor market.
The WSJ said Wednesday’s reading suggests prices and economic activity aren’t reaccelerating, though the data won’t change the Fed’s calculations for cutting rates this year, which affects borrowing costs. Analysts said there is little in the report to reignite fears of rate hikes, letting central bankers stay on hold more comfortably at their meeting in June.
“This is a very comforting report,” Erica Groshen, a senior economic adviser at the Cornell University School of Industrial and Labor Relations, told the WSJ. “It is consistent with the view of a soft landing.”
It could take another two reports to bolster officials’ confidence that inflation can return to the lower levels in place before the pandemic, which means the Fed might not be ready to cut interest rates before September.
Gasoline prices pushed up overall inflation in April, and consumers continued to pay more for housing. Year-over-year rent increases slowed from the previous month, a sign for economists that a big driver of inflation could be easing.
The central bank is still targeting a goal of 2% inflation.
“We did not expect this be a smooth road,” Fed chair Jerome Powell said, adding that the central bank will need to be “patient and let restrictive policy do its work.”
