United States: Inflation falls to two-year low in April
Inflation came in at 4.9% in April, down from March’s 5.0%. April’s reading represented the weakest inflation rate since April 2021 but was still more than double the Federal Reserve’s 2.0% target. In April, a still-sharp rise in food prices was partly offset by falling energy prices.
In addition, the trend pointed down mildly, with annual average inflation coming in at 7.2% in April (March: 7.4%). Meanwhile, core inflation fell to 5.5% in April, from the previous month’s 5.6%.
Finally, consumer prices increased 0.37% from the previous month in April, accelerating from March’s 0.05% increase, supported by higher prices for used cars.
On the reading, Desjardins’ Francis Généreux said:
“Headline inflation continues to cool and should really drop off in the next few months. Core inflation remains sticky, however, suggesting it has become entrenched and will be difficult to root out. The Federal Reserve has opened the door to a rate pause. But given still-high inflation, labour market resiliency and wage strength, that could be a risky move.”
Goldman Sachs analysts said:
“We view today’s report as supportive of our call for a pause at the June FOMC meeting, because the shelter stepdown looks increasingly durable, inflation breadth softened somewhat further, and the strength in used car prices is likely temporary.”