Inflation Falls "Faster Than Expected," Reaching Lowest Level Since 2021

But but but Trump said he would immediately cut inflation and taking two or three weeks isn't "immediate"

* The consumer price index rose a seasonally adjusted 0.2% for the month, putting the 12-month inflation rate at 2.3%, its lowest since February 2021.

* The core CPI also increased 0.2% for the month, while the year-over-year level was 2.8%.

* Egg prices tumbled, falling 12.7%, though they were still up 49.3% from a year ago.

* While the April CPI figures were relatively tame, the Trump tariffs remain a wild card in the inflation picture, depending on where negotiations go between now and the summer.

Inflation was slightly lower than expected in April as President Donald Trump's tariffs just began hitting the slowing U.S. economy, according to a Labor Department report Tuesday.

The consumer price index, which measures the costs for a broad range of goods and services, rose a seasonally adjusted 0.2% for the month, putting the 12-month inflation rate at 2.3%, its lowest since February 2021, the Bureau of Labor Statistics said. The monthly reading was in line with the Dow Jones consensus estimate while the 12-month was a bit below the forecast for 2.4%.

Excluding volatile food and energy prices, the core CPI also increased 0.2% for the month, while the year-over-year level was 2.8%. The forecast was for 0.3% and 2.8%, respectively.

The monthly readings were a bit higher than in March though price increases remain well off their highs of three years ago.

Markets reacted little to the news, with stock futures pointing flat to slightly lower and Treasury yields mixed.

″"Good news on inflation, and we need it given inflation shocks from tariffs are on their way," said Robert Frick, corporate economist at Navy Federal Credit Union. "Non-tariffed goods are still in the pipeline, and perhaps some importers have absorbed their tariff costs for now."

Shelter prices again were the main culprit in pushing up the inflation gauge. The category, which makes about one-third of the index weighting, increased 0.3% in April, accounting for more than half the overall move, according to the BLS.

After posting a 2.4% slide in March, energy prices rebounded, with a 0.7% gain. Food saw a 0.1% decline.

Used vehicle prices saw their second straight drop, down 0.5%, while new vehicles were flat. Apparel costs also were off 0.2% though medical care services increased 0.5%. Health insurance increased 0.4% while motor vehicle insurance was up 0.6%.

Egg prices tumbled, falling 12.7%, though they were still up 49.3% from a year ago.

With the increase in CPI, real average hourly earnings were flat for the month and up 1.4% from a year ago.

While the April CPI figures were relatively tame, the Trump tariffs remain a wild card in the inflation picture, depending on where negotiations go between now and the summer.

...

"Overall, there was no sign of the tariff impact in the April CPI. Although we expect higher tariffs will likely exert upward pressures on core CPI, starting in May, weakening of consumer demand and an inventory drawdown might mitigate the inflationary pressure," Nomura economist Aichi Amemiya said in a note.

Grocery prices rose the slower than they have in five full years.

JP Morgan has now retracted its prediction of a recession in 2025. They say the China tariff pause has made a recession unlikely. So, mostly their recession prediction was based on China tariffs.

posted by Ace at 02:32 PM

| Access Comments