The latest Consumer Price Index (CPI) report from the Bureau of Labor Statistics (BLS) offers a rare dose of calm in the ongoing inflation narrative: U.S. consumer prices rose slightly less than expected in April, despite market concerns about the impact of tariff pressures and volatile economic data.
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Month-over-month CPI: +0.2% (vs. 0.3% forecast)
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Year-over-year CPI: +2.3% (vs. 2.4% forecast)
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This marks the lowest annual inflation rate since February 2021.
These numbers point to moderate inflation growth, with the headline reading surprising slightly to the downside, a welcome signal for consumers and the Federal Reserve alike.
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Core CPI (excluding food and energy):
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+0.2% month-over-month
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+2.8% year-over-year (in line with forecasts)
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Supercore CPI (excluding food, energy, and housing):
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+0.2% month-over-month
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+2.74% year-over-year (down from 2.86% in March)
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The “supercore” measure, often watched closely by the Fed due to its insulation from volatile categories, also decelerated slightly, offering evidence that domestic service inflation may be cooling, even as housing costs continue to put upward pressure on the broader index.
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Shelter: +0.3% in April, accounting for over half of the monthly increase. Shelter remains the single most stubborn contributor to inflation and continues to reflect high housing demand and tight supply conditions.
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Eggs: -12.7%, marking one of the sharpest declines in decades, due to a modest rebound in supply despite continued disruptions from avian flu.
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Apparel: -0.2%
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Gasoline: -0.1% (despite a broader 0.7% gain in energy prices overall)
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Used cars: -0.5%
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Supercore categories like toys, smartphones, and recreation goods also saw price drops, reinforcing the notion that importers and retailers have yet to pass on significant tariff-related price hikes.
This April report is the first major inflation snapshot since President Trump’s “Liberation Day” tariff announcement on April 2, which included sweeping 10% import duties and significantly higher reciprocal tariffs on Chinese goods. However, tariff-driven inflation hasn’t shown up—yet.
As analyst Madison Mills noted:
“Interesting to see some of the decliners across the board… This print coming in slightly better than expected, particularly of note given the fact that this is coming in off the back of those tariff negotiations.”
Economists are warning that tariff effects often take time to filter into CPI data, particularly if importers are temporarily absorbing costs or drawing from pre-tariff inventories. May and June may offer clearer signals of whether consumer prices will begin to reflect those added trade barriers.
TRUMP EFFECT pic.twitter.com/SmPntr23Bg
— Rapid Response 47 (@RapidResponse47) May 13, 2025
Markets responded modestly, with little movement in stocks or Treasury yields at the time of the report. Traders are adjusting their expectations for Federal Reserve interest rate cuts, pushing the likely timing of the first cut from June to September, and reducing expectations from three cuts to two or fewer this year.
