U.S. Inflation Rises Slightly in April

Consumer prices in the U.S. increased modestly in April, with the CPI rising 0.2% after a slight dip in March. On a yearly basis, inflation eased slightly to 2.3%. Core inflation, which excludes food and energy, also rose 0.2% and held steady at 2.8% year-over-year.

Tariffs loom as U.S. inflation edges up, growth slows.

Tariff Impacts Still to Come

The latest data does not yet reflect the full impact of recently imposed tariffs, including a 25% tax on imported vehicles and a 20% duty on certain Chinese goods. Although President Trump paused many country-specific tariffs for 90 days, a broad 10% tariff remains in effect and is expected to influence prices starting in May.

Trade Truce Eases Immediate Pressure

A temporary agreement between the U.S. and China has reduced some tariffs, with U.S. duties on Chinese goods lowered to 30% and Chinese tariffs on U.S. imports dropping to 10%. This has led economists to revise inflation forecasts downward, now expecting a peak of around 3.4% by year-end instead of 4%.

Fed Holds Rates Steady

The Federal Reserve left interest rates unchanged last week, maintaining its cautious stance amid mixed economic signals. Markets anticipate a possible rate cut in September if inflation rises more slowly than expected.

Slower Growth Ahead

While the tariff truce may prevent a recession in the short term, economic growth is still projected to slow. The lingering effects of trade policies and upcoming tariffs on key sectors like pharmaceuticals and semiconductors could add more inflationary pressure later in the year.