April CPI Rises 4.9%, Below Expectations

Inflation in April rose by 4.9% compared to the same period last year, falling short of the anticipated 5% increase, according to a recent Labor Department report. This occurred despite the Federal Reserve’s ongoing efforts to curb inflation with a series of interest rate hikes. The consumer price index, which gauges the cost of various goods and services, showed a monthly increase of 0.4%, in line with the Dow Jones estimate. Core CPI, which excludes unstable food and energy categories, experienced a similar 0.4% monthly increase and a 5.5% annual increase, both meeting expectations.

Markets responded positively to the data, with futures turning optimistic and Treasury yields declining. Following a 25 basis point hike last week, the Fed’s benchmark rate now stands at a range of between 5% to 5.25%, up from near-zero at the beginning of 2022. The central bank has hinted that it may push pause on the tightening campaign at its next meeting in June, although Chair Jerome Powell noted that it is “prepared to do more” if further policy restraint is necessary.