Economists and policymakers are bracing for inflation to re-accelerate as companies adapt to President Trump’s trade war.
U.S. inflation cooled slightly in April in what economists warn could be a final lull before a likely surge in consumer prices stemming from President Trump’s trade war.
The better-than-expected report is welcome news for the Trump administration and the Federal Reserve, which has been trying to wrestle inflation back down to its 2 percent target since the pandemic. But policymakers and economists do not expect the reprieve to last, forecasting prices to begin accelerating in the coming months as import taxes start to bite.
The Consumer Price Index rose 2.3 percent from a year earlier, the slowest annual pace since early 2021, data released by the Bureau of Labor Statistics showed on Tuesday. Over the course of the month, prices rose 0.2 percent, an acceleration compared to March’s 0.1 percent decline.
A closely watched measure of underlying inflation, which strips out volatile food and energy items, climbed 2.8 percent compared with the same time last year, in line with March’s year-over-year rise. On a monthly basis, prices rose 0.2 percent, slightly outpacing the previous month’s 0.1 percent increase.
Breakdown of the inflation rate, by category
Egg prices fell nearly 13 percent in April, which helped to pull down food-related costs by 0.1 percent for the month. Gas prices were down, too, falling 0.1 percent. Used car and truck prices fell 0.5 percent, while new vehicle prices were flat. Airfares dropped 2.8 percent, extending a 5.3 percent drop in March.