U.S. CPI Rises 0.2% in April, Lower Than Forecasted; Annual Rate Falls to Four-Year Low

U.S. Inflation Eases in April, CPI Increases Less Than Expected, Annual Rate Hits Lowest in Four Years

Inflation showed further signs of slowing in April as the year-over-year Consumer Price Index (CPI) dropped to its lowest rate in over four years.

The Bureau of Labor Statistics reported a 0.2% increase in the April CPI, falling short of the 0.3% forecast by economists, though up from the -0.1% change seen in March. On a year-over-year basis, the CPI rose by 2.3%, the lowest rate since February 2021. Expectations had been for a 2.4% increase, with March’s CPI also at 2.4%.

Core CPI, which excludes food and energy, increased by 0.2% in April, a slight uptick from the 0.1% rise in March but still below the anticipated 0.3%. On an annual basis, the core CPI stayed steady at 2.8%, in line with forecasts and unchanged from the previous month.

Bitcoin (BTC) saw a slight increase, trading at $103,800 shortly after the release of the CPI data. Meanwhile, U.S. stock index futures swung from minor losses to modest gains, and the 10-year Treasury yield dipped one basis point to 4.44%.

Fed Expected to Keep Rates Unchanged Despite Slowing Inflation

While the latest CPI data shows a slowdown in inflation, it is unlikely to change the Federal Reserve’s approach to interest rates in the near term.

With concerns over tariffs continuing to ease, market participants are pulling back their expectations for Fed rate cuts. According to the CME FedWatch tool, there’s currently only an 11% chance of a rate cut in June, down significantly from 80% just a month ago.

Even for July, the outlook has shifted. There’s now a 62% chance that the Fed will hold rates steady, a significant increase from just a 7% probability last month.

Fed Chair Jay Powell has repeatedly stated that the central bank is not in a rush to adjust rates. With the recent China tariff resolution and the latest inflation figures, the Fed’s cautious stance appears to be well-supported.