April CPI: A Gradual Easing of Inflation Pressures

Inflation showed signs of a slight decrease in April, potentially reinforcing the Federal Reserve's decision to pause interest rate hikes at its upcoming meeting.

The Labor Department reported on Wednesday that the consumer-price index (CPI) experienced a year-over-year increase of 4.9% in April, down from March's 5% increase. Although inflation has decreased since its peak of 9.1% in June 2022, it still remains at historically high levels.

Monthly consumer prices rose by a seasonally adjusted 0.4% in April, compared to a 0.1% increase in March. The primary drivers of April's increase were housing costs, which are expected to cool down in the coming months. Gasoline and used-car prices also contributed to last month's rise.

The recent report supports a decision to pause rate increases, as it indicates that price pressures are not intensifying and could even be slowing down. For over a year, the Fed has aggressively raised rates in an effort to curb inflation by slowing economic activity. The central bank is now awaiting signs of inflation's decline toward its 2% target.

At last week's meeting, Fed officials approved an increase in the benchmark federal-funds rate to a range of 5% to 5.25%, the highest level in 16 years. Fed Chair Jerome Powell, during a news conference on May 3, hinted that the Fed might be nearing the end of their rate hikes.

Source:

WSJ: https://www.wsj.com/articles/us-inflation-april-2023-consumer-price-index-48f0eac5