Inflationary pressures ease in April as consumer prices rise at slowest pace in three months

The rise in consumer prices in the United States slowed during the month of April, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.

The consumer price index (CPI) rose 0.3% from the previous month and 3.4% from a year earlier in April, a slight deceleration from the annual increase in price by 3.5% in March and up 0.4% month over month.

April’s monthly increase was lower than economists’ forecasts of a 0.4% rise. The annual price rise matched estimates, according to Bloomberg data, and was the slowest increase in three months.

On a “core” basis, which excludes the more volatile costs of food and gasoline, prices in April increased 0.3% from the previous month and 3.6% from last year, an increase lower than the March data. Both measures met economists’ expectations.

Investors now expect two 25 basis point cuts this year, compared to six cuts expected at the start of the year, according to updated Bloomberg data.

Markets rose after the data release, with the 10-year Treasury yield (^TNX) falling about 6 basis points to trade around 4.38%.

“The absence of unpleasant surprises this time is welcome,” wrote Mark Hamrick, an economist analyst at Bankrate, in reaction to the publication. Nonetheless, Hamrick added, “with an overall increase of 3.4% year-over-year and 3.6% in the core (excluding food and energy), these rates remain extremely high. The state of the fight against “Inflation requires that interest rates remain high in the short term.”

After the data was released, markets were pricing in 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 an increase from a probability of around 45% the previous month.

Notable inflation figures include the housing 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 main driver of the monthly rise in core prices, according to the BLS.

According to economists, persistent inflation in the housing sector is largely responsible for the higher underlying inflation figures.

The rent index and the equivalent rent index (OER) each increased by 0.4% on a monthly basis, corresponding to the increase in March. Landlord equivalent rent is the hypothetical rent a landlord would pay for the same property.

Out-of-home accommodation decreased by 0.2% in April after increasing by 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, supported by rising gas prices. The index jumped another 1.1% last month, matching March’s rise. On an annual basis, the index climbed 2.6%.

Gas prices rose 2.8% from March to April after climbing 1.7% the previous month.

The food index increased by 2.2% in April compared to last year, as food prices remained stable from March to April. The food at home index decreased by 0.2% over the month while the food away from home index increased by a further 0.3%.

Other indexes that rose in April included auto insurance, medical care, clothing and personal care. Auto insurance, which stood out in the March report after the category jumped 2.6%, climbed another 1.8% in April.

Indexes for used cars and trucks, home furnishings and operations, as well as 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 @allie_canal, LinkedIn, and email her at [email protected].

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