April Inflation Report: Still Above Target Rate

May 15, 2024

This is the first print in a month that wasn’t hotter than expected, so there’s a relief rally. The excitement is a little overdone. This is not Caitlin Clark. She’s exciting, this is not exciting.

Senior economist at Allianz Trade North America, Dan North, regarding the latest inflation report released by the United States Bureau of Labor Statistics on Wednesday. The report reflects a slight ease in inflation, though prices remain higher than desired in many key areas of our life.

Why It Matters: The Consumer Price Index (CPI) measures a mixed basket of costs of goods and services in the U.S. and is used as an important gauge of inflation (high inflation = your dollar buys you less). While the pace of inflation has decreased from its 2022 peak, the annual rate nonetheless continues to be above the federal government’s 2% target, making it unlikely for the Federal Reserve to cut interest rates this summer (the government raises borrowing costs to try to slow inflation and will cut borrowing costs when inflation subsides). Based on the report, economists now believe the soonest the Fed will begin cutting rates is in September.

The Numbers: On a monthly basis, increases in shelter and gasoline contributed to more than 70% of April’s inflation reading. The report reflects prices increasing 0.3% from March to April, and 3.4% over the past year. Core inflation (“core CPI”) – seen as a better data point as the measure strips out volatile energy and food prices – showed that prices increased 3.6% annually ~ its lowest reading since April 2021 but still above the Fed’s target rate of what an ideal inflation reading would be.

Read More: CPI report shows inflation easing in April, with consumer prices still rising 3.4% from a year ago (CNBC)

by Emily Hooker, based in Texas