U.S. Consumer Prices Slow More Than Expected in April: Official Data

(Updated with details and context)

May 10 (Reuters) – U.S. consumer prices slowed more than expected on an annual basis in April and came in line with month on month expectations, official data showed on Wednesday.

The Labor Department’s consumer price index (CPI) came in at 0.4% last month and is slowing to 4.9% year on year.

Economists polled by Reuters on average were forecasting a 0.4% month-on-month rise and a 5.0% year-on-year increase.

Inflation peaked at 9.1% in June, its steepest rise since November 1981, before easing as energy prices soared following the invasion of Ukraine by Russia.

The price increase in April was driven by gasoline prices, as Saudi Arabia and other oil-producing countries decided to cut production to boost the price of a barrel of crude. Rents for housing also contributed to the rise in inflation.

If we exclude volatile items such as food and energy, so-called core inflation (“core CPI”) rose by 0.4% in April, while year-on-year growth amounts to 5.5%, against a Reuters consensus of respectively +0.4% and +5.5%. The core CPI was driven by sales of used vehicles, which recorded an increase for the first time since last June.

In the financial markets, futures on Wall Street tipped in the green, while the ten-year Treasuries yield US10YT=RR accentuated its losses, yielding five basis points, to 3.47%, after the publication of data that argues for a pause in the Fed tightening cycle.

The US central bank last week raised rates by 25 basis points, bringing the fed funds target to 5.00%-5.25%, after a 500 basis point hike since March 2022, the fastest pace since the 1980s.

(Written by Claude Chendjou, with Lucia Mutikani in Washington, edited by Blandine Hénault and Kate Entringer)