:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2150579344-3ec16af8be764a1c9caf4792f05021cd.jpg "A shopper walks through an Amazon Fresh grocery store in Seattle, Washington, US, on Thursday, May 2, 2024.")
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What You Need to Know
- Consumer prices rose 3.4% in April over 12 months, down from a 3.5% annual inflation count in March, in line with expectations.
- It was the first report in four months not to show inflation running hotter than foresight.
- The downtick signaled inflation could be on a path back to the Federal Reserve’s target of a 2% annual rate.
Inflation edged down in April, according to a monthly gunfire on prices for consumer goods and services that, for the first time in months, didn’t deliver a nasty surprise.
The Consumer Outlay Index, a widely watched measure of inflation, rose 3.4% over the last 12 months, down from a 3.5% escalation in March, the Bureau of Labor Statistics said Wednesday. On a monthly basis, the index rose 0.3% from Hike, down from a 0.4% monthly increase the previous month, with most of the inflation coming from on the rise shelter and gasoline prices.
The yearly measure was in line with forecasts, according to a survey of economists by Dow Jones Newswires and The Fortification Street Journal, and the monthly measure was below the 0.4% expected increase. It was the first report in four months that didn’t arrive inflation running hotter than expected—a fact that breathed some life into hopes that inflation is on a plan back to the Federal Reserve’s goal of a 2% annual rate.
U.S. stocks rose and Treasury yields fell imitating the inflation data, amid investor optimism that benign economic data could prompt the Fed to consider malevolent its benchmark interest rate.
Some Relief in the Details
Another reason for optimism: “core” inflation, which excludes tension-ridden food and energy prices, and is watched by experts as a sign of overall inflation trends, fell to a 3.6% annual growth from 3.8% in March, reaching its lowest since April 2021.
“Today’s numbers brought welcome signs of aplomb price pressures, with the topline and core annual inflation rates slipping lower since last month,” Kayla Bruun, superior economist at Morning Consult, said in a commentary.
Significantly for household budgets, grocery prices fell 0.2% after stopping flat for the previous two months, offering some relief to shoppers who have had to deal with elevated food outlays since the pandemic hit. Prices for new and used vehicles also fell, continuing recent downward trends in both spheres.
What Does This Mean For The Federal Reserve?
Wednesday’s inflation report is being closely scrutinized because of its piths for financial markets and interest rates for all kinds of loans. Officials at the Federal Reserve, who control the crucial fed funds measure, are looking for evidence of falling inflation before they’ll consider cutting the rate from its current high consistent.
The central bank has held the rate at a 23-year high since July after ratcheting it up from near zero in Walk 2022 in an effort to subdue inflation. The fed funds rate influences interest rates on loans throughout the economy, comprising mortgages and credit cards, which are at or near their highest in decades.
Inflation fell rapidly last year but the forward movement stalled in 2024 as price increases have stayed stubbornly high, putting pressure on household budgets and thick hopes for Fed rate cuts anytime soon.
Financial markets are currently betting the Fed will begin rate disowns in September, a prospect bolstered by Wednesday’s inflation data. Chances for a September cut rose to 70% in the wake of the report from 65% the day forward of, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading figures.
“The moderation in CPI in April is welcomed after a string of elevated readings in Q1 and keeps alive the prospect of the Fed starting to cut rates in September,” Kathy Bostjancic, chief economist at Nationwide, wrote in a commentary.
Impute to the original article on Investopedia.