Inflation pressures ease in April as consumer prices rise at slowest pace in three

US consumer price increases cooled during the month of April, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.

The Consumer Price Index (CPI) rose 0.3% over the previous month and 3.4% over the prior year in April, a slight deceleration from March’s 3.5% annual gain in prices and 0.4% month-over-month increase.

April’s monthly increase came in lower than economist forecasts of a 0.4% uptick. The annual rise in prices matched estimates, according to data from Bloomberg, and marked the slowest gain in three months.

On a “core” basis, which strips out the more volatile costs of food and gas, prices in April climbed 0.3% over the prior month and 3.6% over last year — cooler than March’s data. Both measures met economist expectations.

Investors now anticipate two 25 basis point cuts this year, down from the six cuts expected at the start of the year, according to updated Bloomberg data.

Markets rose following the data’s release, with the 10-year Treasury yield (^TNX) falling about 6 basis points to trade around 4.38%.

“The lack of a nasty surprise this time around is welcomed,” Bankrate senior economist analyst Mark Hamrick wrote in reaction to the print. Still, Hamrick added, “with the 3.4% year-over-year headline increase and 3.6% in the core (excluding food and energy), these remain irritatingly high. The status of the battle against inflation requires that interest rates remain elevated in the near-term.”

Following the data’s release, markets were pricing in a roughly 53% chance the Federal Reserve begins to cut rates at its September meeting, according to data from the CME FedWatch Tool. That’s up from about a 45% chance the month prior.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Notable call-outs from the inflation print include the shelter index, which rose 5.5% on an unadjusted, annual basis, a slowdown from March. The index rose 0.4% month over month and was the largest factor in the monthly increase in core prices, according to the BLS.

Sticky shelter inflation is largely to blame for higher core inflation readings, according to economists.

The index for rent and owners’ equivalent rent (OER) each rose 0.4% on a monthly basis, matching March’s rise. Owners’ equivalent rent is the hypothetical rent a homeowner would pay for the same property.

Lodging away from home decreased 0.2% in April after rising 0.1% in March.

FILE - Federal Reserve Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, May 1, 2024. The sharp interest rate hikes of the past two years will likely take longer than previously expected to bring down inflation, several Federal Reserve officials have said in recent comments, suggesting there may be few, if any, rate cuts this year. (AP Photo/Susan Walsh, File)

Federal Reserve Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, May 1, 2024. (AP Photo/Susan Walsh, File) (ASSOCIATED PRESS)

Energy prices continued to rise in April, buoyed by higher gas prices. The index jumped another 1.1% last month, matching March’s increase. On a yearly basis, the index climbed 2.6%.

Gas prices rose 2.8% from March to April after climbing 1.7% the previous month.

The food index increased 2.2% in April over the last year, with food prices flat from March to April. The index for food at home decreased 0.2% over the month while food away from home rose another 0.3%.

Other indexes that increased in April included motor vehicle insurance, medical care, apparel, and personal care. Motor vehicle insurance, a standout in March’s report after the category jumped 2.6%, climbed another 1.8% in April.

The indexes for used cars and trucks, household furnishings and operations, and new vehicles were among those that decreased over the month, according to the BLS.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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