U.S. consumer prices rose at a slightly slower pace in April compared to March, though persistent supply-side disruptions still kept inflation near its highest level in 40 years.
The Bureau of Labor Statistics’ April Consumer Price Index (CPI) rose 8.3% in April over last year, coming down from March’s 8.5% advance. That rise had marked the fastest rate since 1981. Consensus economists were expecting an 8.1% increase in April, according to Bloomberg.
On a month-over-month basis, the broadest measure of CPI increased by 0.3%, compared to March’s 1.2% rise.
Heading into Wednesday’s report, many economists had expected the CPI would decelerate in April compared to the prior month, showing at least tentative a sign that March was the peak rate of inflation for the year. The energy component of the CPI was expected to contribute notably to the deceleration, since prices for crude oil, gas and other energy commodities moderated in April after spiking in March immediately following Russia’s invasion of Ukraine.
But even excluding energy and the similarly volatile food category, core CPI decelerated only modestly in April compared to March. Core CPI rose by 6.2% last month over last year, following March’s 6.5% increase. And on a month-over-month basis, core CPI rose 0.3%, compared to the 0.4% rate expected.
For investors, the latest inflation report serves as a closely watched gauge of the inflation Americans are experiencing for groceries, gas, housing and a variety of other goods and services. Though some consumption data and company reports have suggested consumers are still spending despite rising prices, investors have been closely watching to see whether persistently high inflation eventually curbs consumption significantly. This would in turn drag on U.S. economic growth, which depends most heavily on consumer spending.
And the CPI data also acts as an indicator of how much action the Federal Reserve may need to take in order to bring inflation back down to its 2% target. With inflation having run well above that level for the past year, the central bank has already raised interest rates by a total of 75 basis points across two Federal Open Market Committee meetings in the past three months, while signaling more rate hikes are in the pipeline for this year.