Karee Venema
U.S. consumer price inflation rose as expected in April, though the Consumer Price Index (CPI) showed price increases for a broad range of goods and services.
According to the April CPI report, headline inflation rose 0.2% month over month in April, faster than March's 0.1% decline and in line with economists' projections.
However, CPI was up 2.3% year over year, slower than the 2.4% consensus estimate and the lowest reading since February 2021.
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Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% from March to April and 2.8% year over year. The monthly figure came in lower than the 0.2% gain expected by economists, while the annual increase matched forecasts.
Despite the encouraging data, the bottom line from the April CPI report is that prices are still rising faster than consumers and the Fed would like.
Between 2000 and 2020, annual inflation in the U.S. averaged just 2.1%. (Recall that the Federal Reserve's inflation target is 2%.)
Perhaps we didn't appreciate it enough at the time, but the first two decades of the 21st century were a sort of Goldilocks era for inflation: not too fast and not too slow.
Just have a look at some of the subcategories in the latest CPI report to see how much things have changed. Below, we highlight the goods and services that are weighing most heavily on folks' finances.
Rising prices: where inflation is hitting hardest
Groceries mercifully declined in April as five categories saw decreases. Most notable was a 12.7% decrease in egg prices. Indeed, the food at home category was 0.1% last month after rising 0.4% in March.
The indexes for fruits and vegetables; cereal and bakery products; meats , poultry, fish and eggs; dairy; and other food at home all declined, though the price of nonalcoholic beverages increased 0.7%.
The food away from home category, which includes meals at restaurants and bars, rose 0.4% in April after gaining 0.4% in March.
Meanwhile, used car prices, fell for a second straight month, down 0.4% after falling 0.4% in March..
Medicine and medical devices also got a bit pricier last month, as medical care commodities edged up 0.4%. Apparel prices, meanwhile, fell 0.2% after rising 0.4% in March.
Other contributors to inflation were services, especially energy services, which increased 1.5% last month after rising 1.6% in March, due to rising natural gas costs.
Housing costs, or the shelter index, also remained sticky and lifted inflation last month.
"The index for shelter rose 0.3 percent in April, accounting for more than half of the all items monthly increase," the Bureau of Labor Statistics said. "The index for owners' equivalent rent rose 0.4 percent in April and the index for rent increased 0.3 percent. The lodging away from home index fell 0.1 percent in April. "
Elsewhere, prices for motor vehicle insurance index rose 0.6% in April.
Meanwhile, the index for airline fares fell 2.8% last month, while prices for new cars and recreation where unchanged.
Where inflation goes from here is hard to say as forecasters brace for the potential impact of tariffs under the Trump administration.
"The April inflation report was good news for American consumers," says Comerica Chief Economist Bill Adams. While prices are still much higher than before the pandemic, "the rate of increase has slowed down to a normal pace this spring," he adds.
Adams expects inflation to pick up in the second half of this year as businesses pass along higher costs to consumers. He notes, though, that the impact may not be as big as previously anticipated, given the recent lowering of tariff rates.
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