The U.S. annual inflation rate slowed to 4.9 percent in April, down from 5 percent in March, according to the Bureau of Labor Statistics (BLS). This is slightly lower than the consensus estimate of 5 percent.
The consumer price index (CPI) rose 0.4 percent month-over-month.
The core inflation rate, which strips the volatile food and energy components, also dipped to 5.5 percent last month, down from 5.6 percent in March. This matched market expectations. The core CPI jumped 0.4 percent from March to April.
Looking ahead to the May forecasts, the Federal Reserve Bank of Cleveland’s Inflation Nowcasting anticipates the annual inflation rate to ease to 4.4 percent and the core CPI to slow to 5.4 percent. On a month-over-month basis, the CPI and core CPI are projected to rise 0.2 percent and 0.5 percent, respectively.
On a year-over-year basis, the food index slowed to 7.7 percent, with supermarket prices coming in at 7.1 percent. The food away from home subindex rose 8.6 percent compared to a year ago.
The energy index fell 5.1 percent at an annualized rate but rose 0.6 percent month-over-month.
The chief talking point among officials at the U.S. central bank is that inflation is still too high.
Speaking at the Economic Club of New York on May 9, New York Fed Bank President John Williams suggested that interest rates could be increased if price pressures do not diminish.
“Because of the lag between policy actions and their [Federal Open Market Committee] effects, it will take time for the FOMC’s actions to restore balance to the economy and return inflation to our 2 percent target,” he said in prepared remarks, adding that he anticipates the annual inflation rate will fall to 3.25 percent this year.
Fed Governor Philip Jefferson noted on May 9 that the U.S. economy is slowing in an “orderly fashion,” allowing inflation to fall.
In the first quarter, the GDP growth rate was 1.1 percent, the lowest print since the second quarter of last year.
The futures market shares the Fed’s signal that it would pause its rate hikes. According to the CME FedWatch Tool, most investors think the central bank will leave the benchmark fed funds rate at 5.00 to 5.25 percent at next month’s FOMC policy meeting.
Meanwhile, more inflation data will be released this week.
The April producer price index (PPI) will be published on May 11, which is expected to climb 0.3 percent month-over-month but slow to 2.4 percent year-over-year. The core PPI is projected to rise 0.2 percent month-over-month and dip to 3.3 percent on an annualized basis.
Import and export prices for April are anticipated to be little changed, according to consensus estimates.