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Consumer prices rose 0.3% in April

Consumer prices rose less than expected in April

Inflation eased slightly in April, providing at least some relief to consumers while remaining above levels that would suggest an interest rate cut is imminent.

The Consumer Price Index, a broad measure of the price of goods and services at checkout, rose 0.3% from March, the Labor Department’s Bureau of Labor Services reported Wednesday. This was slightly below the Dow Jones estimate of 0.4%.

However, year-over-year, the CPI increased by 3.4%, in line with expectations.

Excluding food and energy, the key figure for core inflation stood at 0.3% month-on-month and 3.6% on an annual basis, both as expected. The 12-month core inflation figure was the lowest since April 2021.

Markets reacted positively after the CPI release, with futures linked to major stock indexes rising and Treasury yields falling. Futures traders cited the implied likelihood that the Federal Reserve will begin cutting interest rates in September.

“This is the first number in a month that hasn’t been warmer than expected, so there’s some relief,” said Dan North, senior economist at Allianz Trade North America. “The excitement is a little over the top. She’s not Caitlin Clark. She’s exciting, it’s not exciting.”

Furthermore, on Wednesday, retail sales remained stable for the month, compared to the estimate of an increase of 0.4%. This figure is adjusted for seasonality but not inflation, suggesting that consumers have not kept pace with rising prices.

For the inflation report, price increases during the month were strongly driven by rising housing and energy prices.

Housing costs, a particularly problematic point for Federal Reserve officials who expect inflation to decline this year, rose 0.4% for the month and 5.5% from last year. to last year. Both levels are uncomfortably high for a Fed trying to bring headline inflation to 2%.

The energy index increased by 1.1% month-on-month and 2.6% year-on-year. Food remained stable and increased by 2.2% respectively. Prices of used and new vehicles, which had contributed to the early rise in inflation at the height of the Covid pandemic, both declined, falling by 1.4% and 0.4% respectively.

Areas showing notable gains during the month included clothing (1.2%), transportation services (0.9%), and medical care services (0.4%). For transportation services, this brought the annual increase to 11.2. Non-energy services, a key point for policymakers, increased by 0.4% over the month and 5.3% over the year.

Rising inflation was bad news for workers, who saw their income fall 0.2% over the month after adjusting for inflation. Over 12 months, real profits increased by only 0.5%.

In the housing components, both the main residence rent and the significant landlord equivalent rent, or what landlords think they can get for renting their property, increased by 0.4% over the month. They increased by 5.4% and 5.8% respectively over 12 months.

This is breaking news. Please check back for updates.

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