The U.S. consumer price index rose 0.3% from March to April, in line with our expectations. April’s report ends a streak of hotter-than-expected increases in the first three months of 2024. Relative to a year ago, the headline CPI ticked down from 3.5% to 3.4%. Excluding food and energy, core CPI also rose 0.3% in April after a three-month stretch of 0.4% growth. April’s gain lowered the annual core CPI rate from 3.8% to 3.6%. The latest CPI report will be received warmly at the Federal Reserve, though after the first quarter’s upside surprises, several more months of encouraging disinflation will be needed for policymakers to begin loosening policy. It is our expectation that will happen in the second half of 2024, but there is little room in that forecast for anything to go wrong.
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