Consumer prices grew at the weakest annual rate since the year ending April 2021, indicating that inflationary pressures in the US economy remain high.
The Consumer Price Index (CPI) climbed 0.4% over the previous month and 4.9% over the prior year in April, according to the latest statistics from the Bureau of Labor Statistics released Wednesday morning. Prices increased 0.1% month over month and 5% year over year in March.
Price growth still much higher than Fed’s target
According to Bloomberg data, economists predicted prices to grow 0.4% month over month and 5% year over year in April. Although the yearly growth was lower than in March, it was still much more than the Federal Reserve's 2% target.
Prices increased 0.4% over the previous month and 5.5% over the previous year on a "core" basis, which excludes the more variable expenses of food and gas. According to Bloomberg data, both indicators were in line with economist estimates.
Core inflation was particularly sticky last month, as rents continued to rise. In April, the index for rent and the index for owners' equivalent rent increased by 0.6% and 0.5%, respectively. The comparable rent for owners is the hypothetical rent that a homeowner would pay.
Over the last year, the shelter index grew by 8.1%, accounting for more than 60% of the overall increase in core inflation.
Rate hikes will be suspended
The Fed has been raising interest rates in an attempt to reduce inflation, but by raising rates too quickly, the central bank risks driving the economy into a recession. The Fed suggested last week that it would suspend its rate hikes, saying it will evaluate incoming data before its next meeting in June.
Following the announcement of the report, US markets nudged higher in pre-market trade.
The energy index fell 5.1% in the 12 months ended in April, while the food index grew 7.7%. The seasonally adjusted energy index increased 0.6% from March to April, led by a 3% increase in gas prices.
On a seasonally adjusted basis, fuel oil prices declined 4.5% from the previous month. They were down 20.2% year on year, while gas prices were down 12.2% year on year.
Food prices continued to fall in April, with the food index remaining constant while the food at home index falling 0.2%, according to the BLS. After falling 10.9% in March, egg prices dipped 1.5% in April.