The most recent Consumer Price Index (CPI) report for April 2024 showed some promising signs of slowing inflation, providing cautious optimism for the economy. Here are the key highlights:
- The overall CPI rose 3.4% year-over-year in April, down from 3.5% in March. This marked a slight easing in the annual inflation rate.
- The core CPI, which excludes volatile food and energy prices, rose 3.6% year-over-year in April, down from 3.8% in March. This was the lowest annual increase since early 2021.
- On a month-over-month basis, the overall CPI rose 0.3% in April, down from 0.4% in March. The core CPI also increased by 0.3%, down from 0.4% in the previous month.
- Energy prices rose 1.1% in April, but food prices were unchanged. Grocery prices fell for the first time in three months, with prices up just 1.1% over the past year.
- Housing costs, a major driver of inflation, showed only a modest increase in April. However, housing inflation remained stubbornly high, with rent and owners’ equivalent rent both rising 0.4%.
While the slowdown in inflation was welcomed, economists cautioned that one month of positive data was not enough to alleviate concerns. They emphasized the need for continued moderation, particularly in services prices and housing costs, which have been persistent sources of inflationary pressure .The report provided some relief to the Federal Reserve in its efforts to control inflation without causing a recession. However, opinions remained divided on the likelihood of interest rate cuts this year, as the central bank weighs the progress made against the persistence of certain inflationary factors.