CPI inflation April 2025: Rate hits 2.3%
In April, inflation in the United States was slightly lower than expected, with the consumer price index (CPI) rising by a seasonally adjusted 0.2%. This brought the 12-month inflation rate to 2.3%, its lowest since February 2021. The core CPI, which excludes volatile food and energy prices, also increased by 0.2% for the month, with a year-over-year level of 2.8%.
While the monthly readings were slightly higher than in March, price increases remain well below their highs from three years ago. The main driver of the inflation gauge was shelter prices, which increased by 0.3% in April.
Energy prices rebounded with a 0.7% gain after a 2.4% slide in March, while food prices saw a 0.1% decline. Used vehicle prices dropped for the second consecutive month by 0.5%, and apparel costs were down by 0.2%. Medical care services increased by 0.5%, and health insurance and motor vehicle insurance also saw modest increases.
Despite the increase in CPI, real average hourly earnings remained flat for the month and were up by 1.4% from a year ago. The Trump tariffs continue to be a wildcard in the inflation picture, with negotiations ongoing between the U.S. and its trading partners.
Economists anticipate that inflation numbers could rise again in the summer months due to the impact of tariffs, but the extent of this increase remains uncertain. With the recent developments in tariff negotiations, the market now expects less chance of interest rate cuts this year. The Federal Reserve had been expected to start easing in June, but the first cut has been pushed out to September.
The Fed relies heavily on the Commerce Department’s inflation gauge for policymaking, with the CPI playing a role in that index. The Bureau of Labor Statistics will release its April reading on producer prices, seen as a leading indicator of inflation, later this week.
Overall, the April CPI figures were relatively tame, but the effects of tariffs and trade negotiations could influence inflation trends in the coming months. Markets will be closely watching for any new developments that could impact the economy and inflation rates.
