“In reality, the data for April is likely to be largely unaffected by President Trump’s announcements on Liberation Day,” said Julien Lafargue, chief market strategist at Barclays Private Bank, in an email. “This is because exemptions were granted for goods that had left exporting countries before 2 April, and because consumers and businesses rushed to front-run tariffs in February and March.” Economists are looking for early signs that Mr. Trump’s tariffs are trickling through to American households. Because tariffs are import taxes paid by U.S. companies, which largely pass on the added costs to shoppers, they are at some point expected to boost consumer prices.
Inflation slowed more than expected in April, despite tariff-related price pressures building
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- Household furnishings and appliances leapt by 1%, and computer and telephone prices rose by 0.3%, a turnabout from a 0.6% average drop during the previous 12 months, he added.
- Meanwhile, some consumers and businesses rushed to order goods ahead of the tariffs’ imposition, aiming to skirt the new import duties by front-loading their purchases.
- However, though inflation nowcasts are useful and sometimes superior to other inflation estimates, in recent months they have tended to overestimate inflation.
- Prices for goods excluding food, energy and autos rose 0.2%, exceeding the past 12 months’ zero average, he wrote in a note to investors.
And after a stunningly strong January jobs report, the market’s worries aren’t exactly misplaced. Like others on Wall Street, Baird expects the Fed in September to shift its focus from tight policy to tackle inflation to a somewhat easier stance to head off a potential weakening in the jobs picture. Because of the tentative trade agreement between China and the U.S., inflation may not rise as much as earlier anticipated, noted EY’s Daco, who said he’s lowered his year-end CPI forecast by 0.4 percentage points to 3.2%. And on Monday, the Trump administration and China agreed to a temporary but significant easing of tariffs imposed over the last couple months, scaling back the import duties on Chinese-made goods from 145% to 30%. April’s reading reflects the lowest level since February 2021, government data shows.
Consumers got some relief at the grocery store, where prices fell 0.4% from March, and that brought down overall food prices by 0.1%. However, what’s been a yearslong unwinding of post-pandemic inflation also isn’t expected to last. This website provides information about the brokerage and investment advisory services provided by J.P.
Gold recedes to daily lows near 3,290
Explore solutions to challenges that low- and moderate-income communities face. Network with community development practitioners and policymakers from across the country. Download our spreadsheet to see all the inflation expectations model’s outputs going back to 1982. There’s more, but the bottom line is that the Fed believes the PCE index has some critical advantages over CPI when it comes to formulating monetary policy. That’s why the Consumer Price Index, or CPI report, has become one of the stars of the economic calendar.
Powell and other Fed officials have said they’re in no hurry to make cuts since the economy isn’t yet cracking under the weight of high interest rates. “It will likely take similar well-behaved inflation data in August (or a higher jobless rate) to assure a majority of voting members on the FOMC that inflation is moving convincingly to the 2.0% target,” wrote Priscilla Thiagamoorthy, senior economist at BMO Capital Markets. Federal Reserve officials will be closely looking at the inflation data, and at least one central banker said this weekend she still isn’t confident that inflation is moving lower. Below please find a selection of commentary from economists, strategists and other market pros on what to expect from the next CPI report, sometimes edited for clarity or brevity. The news Tuesday was good for bitfinex review inflation, and investors hope it will get even better Wednesday when the Labor Department releases the July consumer price index report. He added, “As such, both the Fed and global investors will still need to be a bit more patient before they can properly assess the impact of the trade uncertainty on consumer prices.”
Statistics
This nowcast estimate that July and August core CPI will rise at a 0.4% monthly rate. The Consumer Price Index inflation report for May will be released on June 11. Inflation nowcasting from the Atlanta Federal Reserve estimates 0.12% headline monthly inflation for May and 0.23% when food and energy prices are removed. That would be similar to the 0.2% monthly CPI price increase reported in April for both headline and when adjusted for food and energy.. While the monthly gauge isn’t as comprehensive as the quarterly data that guides central bank policy, it nonetheless gives RBA officials a sense of the trajectory of consumer prices.
- This chart compares the model’s estimate of 10-year real interest rates against TIPS yields.
- Economists view core inflation as a more reliable indicator of the trajectory of inflation because prices for food and gas often go up and down for reasons that have nothing to do with broader inflation trends.
- He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor’s Business Daily, among many other outlets.
- “The latest data do show that we’ve had considerable cooling in the labor market,” Powell said. “We’re very much aware that we have two-sided risks now. …We’re determined to balance those as best we can.”
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail. Inflation hit a four-decade high in 2022, prompting the Federal Reserve to embark on its most aggressive campaign of interest rate hikes since the late Carter and early Reagan administrations.
It’s the lowest annual rate since February 2021, and the April data was slightly better than expected. Economists expected that the CPI would rise 0.3% from March and hold steady at 2.4% for the 12 months ended in April, according to FactSet. US inflation slowed to its lowest rate in more than four years, an unexpected and welcome development at a time when President Donald Trump’s dramatically escalated tariffs are expected to cause prices to rise. Average nationwide prices for unleaded gas fell around 18 cents per gallon to $3.61 during May, according to Gasbuddy data, driving a large portion of the expected decrease, several economists said. However, these nowcasts are primarily informed by energy price trends and historical prices, so its possible that any potential impact from tariffs is missed. Still, many large firms whether retailers or car manufactures have not yet adjusted pricing in response to tariffs, so May’s data may not pick up a material tariff impact.
Chart 1: Ten-Year Expected Inflation and Real and Inflation Risk Premia
While that sentiment has dissipated, there’s still worry about the Fed being slow to ease, just as it was slow to tighten when inflation began to escalate. Mr. Trump has also announced tariffs, such as his April 2 “Liberation Day” levies, and then backed off from them. On April 9, he hit the pause button with a 90-day delay, scaling back the tariffs to a 10% rate. On Thursday, the Bureau of Labor Statistics will release the Producer Price Index for April, providing a look at wholesale-level inflation. Economists anticipate that tariffs likely will make a bigger splash on physical and virtual store shelves in May and June. However, data set to be released later this week could give a glimpse as to what, if anything, could be coming down the pike.
Market reaction to Australia’s monthly CPI inflation
Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions. The details of the report may shed light on inflation’s impact on people’s everyday finances, as well as the outlook for the Fed.
Core inflation is expected to stay at an annual rate of 2.6%, the same as in March, according to the median forecast. That’s especially important because the Fed uses core inflation to assess whether it’s hitting its annual 2% inflation goal. Although the first three months of the year showed consumer prices rising more than expected, a relatively tame report in April raised hopes that the uptick was more of a fluke than a genuine resurgence. Should cooler inflation continue, it could encourage officials at the Federal Reserve to cut the central bank’s key interest rate later in the year. That would mean prices rose 3.4% over the year, the same year-over-year rate as April. Economists expect that prices across a broad spectrum of goods and services rose 0.4% on the month, just ahead of the January pace for 0.3%, according to the Dow Jones consensus.
Governor Michele Bullock signaled after the decision that she’s more concerned about downside risks to economic growth as trade turmoil and geopolitical upheaval come to the fore. 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%.
Analysis by Today has shown that most large retailers have not increased pricing yet in reaction to tariffs, though several plan to in June or July. That may mean that any impact of tariffs may not be seen how to read stock charts in May’s CPI report and even June’s report may not measure the full impact. The April 2025 jobs report underscored the labor market’s resilience in the face of trade policy uncertainties and recent market volatility. In its February survey of consumers, the New York Fed found that while respondents held to their one-year outlook for inflation at 3%, their expectations at the three- and five-year horizons accelerated to 2.7% and 2.9% respectively, both well ahead of the central bank’s 2% target. The bank’s economists now expect core CPI to run at a 3.3% rate this year, up from the previous 2.8% estimate. Focusing on the core personal consumption expenditures price index, the preferred Fed gauge, Wells Fargo sees inflation at 2.5% for the year, versus a prior estimate of 2.2%.
As a large component of CPI, lower housing costs may help drive inflation lower. If the next CPI report surprises to the upside like the January jobs report did, it will further dash hopes for a more dovish central bank in the latter part of 2023. Worse, rising interest rates raise the possibility of a Fed-induced recession. But try as the Fed might to tame inflation by increasing unemployment, the labor market has thus far refused to play along. After all, the S&P 500 rose more than 6% in the first month of 2023 thanks in part to expectations that the Fed would pivot away from its aggressive policy on interest rates sometime later this year. While consumers how to turn a closet into an office and business owners continue to express concern over high prices, the trend indeed has shifted.
