The Consumer Price Index released Wednesday shows inflation easing with a 0.3% monthly increase for April, compared to the 0.4% monthly rise recorded in both March and February.
Viewed on an annual basis, the all-items index increased 3.4% for the 12-month period ending in April, according to the US Bureau of Labor Statistics CPI report. This was a smaller increase in inflation than the 3.5% increase for the 12-month period that ended in March.
The index for shelter rose in April, as did the index for gasoline. Combined, these two indexes
contributed over 70% of the monthly increase in the index for all items. The energy index rose 1.1% over the month. The food index was unchanged in April.
The less volatile “core index,” which excludes food and energy, rose 0.3% in April, after rising 0.4% in each of the three preceding months. Indexes that increased in April include shelter, motor vehicle insurance, medical care, apparel, and personal care. Indexes for used cars and trucks, household furnishings and new vehicles were among those that decreased.
Viewed on annual basis, the core index excluding food and energy rose 3.6% over the 12-month period ending in April, the smallest increase since April 2021. The energy index increased 2.6% for the 12 months ending April. The food index increased 2.2% during the same period.
The stock market reacted favorably to the news of softening inflation, with the S&P 500 and Nasdaq Composite reaching all-time highs on Wednesday after the CPI report was released.
The inflation report is fueling investors’ expectations that the Federal Reserve may move forward in the fall with cuts to interest rates, which have been kept at a two-decade high as part of the Fed’s strategy to cool the economy and lower inflation.
