The Consumer Price Index (CPI) for April showed that headline inflation continues to moderate, dipping below 5% for the first time since April 2021. Headline CPI is now below the Fed funds rate, reducing the need for additional Federal Reserve (Fed) tightening. However, annual core inflation failed to show clear deceleration, sitting at 5.5%—a level it’s hovered around since the start of the year.
Inflation remains too elevated, and the deceleration is proving slow. Yet, after the strong April jobs report, the Fed will be comforted by the fact inflation has not increased. Today’s CPI number likely reinforces the Fed’s policy slant toward a rate hiking pause.
Consumer Price Index
Year-over-year % change, 2010–present