April CPI Up Modestly, About As Expected

2025-05-13 10:00:00 ET

Summary

• The April CPI rose by 0.2% for the month, lowering the 12-month trend rate to 2.3% – the lowest trend rate since February 2021.
• Tariff impacts are more likely to be seen in the CPI figures in coming months, especially as shortages in some goods appear.
• The problem for the Fed would come if inflation moves higher in coming months at the same time that the economy slows and unemployment increases.

By David W. Berson, Ph.D.

The April Consumer Price Index (CPI) rose by 0.2 percent for the month, lowering the 12-month trend rate to 2.3 percent – the lowest trend rate since February 2021. The core CPI (removing the volatile food and energy components) also increased by 0.2 percent – a tad below expectations. The trend rate for the core CPI remained at 2.8 percent. Shelter costs climbed by 0.3 percent for the month, which made up more than half of the increase in the overall CPI. Energy prices also rose, as natural gas and electricity costs more than offset falling gasoline prices. Commodities, less food and energy, increased by only 0.1 percent. It’s difficult to see any significant impact from tariffs in the April inflation report – even new auto prices were unchanged and used prices dropped by 0.5 percent (despite a jump in the Manheim used car price figures). But tariff impacts are more likely to be seen in the CPI figures in coming months, especially as shortages in some goods appear. Of course, if trade agreements with major trading partners actually occur, the worst impacts of rising tariffs should be avoided....

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