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United States Inflation April 2024

United States: Inflation drops slightly in April

Inflation edged down to 3.4% in April, which followed March’s 3.5% and was in line with market expectations. That said, inflation was still well above the Fed’s 2.0% target. The softer rise was largely driven by more moderate rises in prices for housing and transportation.

Annual average inflation ticked down to 3.4% in April (March: 3.5%). Meanwhile, core inflation edged down to 3.6% in April, from March’s 3.8%.

Finally, consumer prices increased 0.31% in April over the previous month, slowing down from March’s 0.38% increase. April’s result marked the weakest reading since January.

On the monetary policy implications of the data, Nomura analysts said:

“This report will support the case that the Q1 inflation acceleration was an anomaly. It will take time for the FOMC to rebuild confidence in disinflation, but we continue to expect two rate cuts this year, in July and December.”

TD Economics’ Thomas Feltmate said:

“One ‘good’ month does not undo Q1’s string of hotter inflation readings […] the 3-and-6-month inflation trends are expected to gradually cool through the second half of the year and likely be in a place by late-2024 where policymakers would feel comfortable to begin dialing back the policy rate.”

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