CPI Report: Inflation Reaches Its Slowest Pace Since 2021
Inflation fell in April to its lowest rate since February 2021, per the latest data released Tuesday by the U.S. Bureau of Labor Statistics (BLS).
The consumer price index (CPI), which measures the prices of key goods and services, tracked that inflation was at an annual rate of 2.3% in April, a decline from 2.4% in March and a four-year low.
The prices of core goods, excluding the volatile food and energy categories, rose 0.2% from March to April, below industry forecasts of 0.3%. Meanwhile, the yearly increase in core goods of 2.8% aligned with industry predictions. According to Bloomberg, consumer prices overall rose less than expected in April.
April's CPI data indicates "positive momentum," Rob Holston, EY global and Americas consumer products sector leader, told Entrepreneur in a statement.
"Brands should use the positive momentum to strengthen consumer connections and rethink value," Holston stated. "Those that move with the market can thrive – building stronger, more meaningful relationships with consumers."
Related: The Fed Kept Rates Unchanged, But an Industry Veteran Says 'Mortgage Rates Will Drop.' Here's Why.
Shelter costs were the main reason for the CPI increase in April. The category alone rose 0.3% from March to April, accounting for more than half of the overall monthly increase, per BLS. Energy costs also rose 0.7% over the month, but used car prices were down 0.5% and food prices dropped 0.1%.
Meanwhile, the price of eggs decreased by 12.7% from March to April, the largest price drop in the category since 1984, though prices were still up 49.3% from a year ago.
How Will the CPI Report Impact Rate Cuts?
Gregory Daco, EY's chief economist, told Entrepreneur in a statement that EY now anticipates only two rate cuts instead of three for the year, and predicts that the first rate cut will happen in September instead of July.
"For the Fed, tame inflation dynamics and resilient labor market conditions support the case for holding rates steady beyond mid-year," Daco explained.
Related: U.S. Businesses Added 155,000 New Jobs in March, According to ADP Data: 'A Good One for the Economy'
Federal Reserve policymakers held rates steady at 4.25% to 4.5% after the Federal Open Market Committee meeting earlier this month. The last time the Fed cut rates was at its December meeting, when it lowered rates by 0.25%.
Austin Schaul, head of research at financial planning firm Avantax, told Entrepreneur that the April CPI report was "a win for the Fed."
"With headline inflation easing to 2.3% – the lowest since February 2021 – Fed Chair Powell has more reason to stay patient on rate cuts," Schaul stated.
Daco cautioned that upcoming CPI reports will reflect trade policies, like tariffs. President Donald Trump announced last month that he would levy a universal 10% tariff on all countries.
On Monday, the U.S. announced it would cut its tariff rate on Chinese imports to 30% from 145% amid trade talks.
Related: The Fed's Decision to Keep Rates Steady Is 'Unsurprising,' According to a JPMorgan Expert. Here's Why.
Schaul says that the recent trade de-escalation gives the Fed "some valuable breathing space."
"Maybe it's not a green light for cuts just yet, but it's a foot in the door, keeping it open for action if growth slows," he stated.
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Economic data: Housing starts (July); Building permits (July) Earnings: Home Depot (HD), XPeng (XPEV), Medtronic (MDT), Amer Sports (AS), Toll Brothers (TOL), La-Z-Boy (LZB) Here are some of the biggest stories you may have missed overnight and early this morning: Signs of a healthier path to new records emerge for stocks Nvidia is working on an H20-beating AI chip for China Trump tariffs get S&P seal of approval Why stocks are looking ripe for a regime shift Intel gets a $2 billion lifeline from SoftBank Trump pushes Putin-Zelensky meeting after talks with both Home Depot to report earnings as Wall Street eyes US sales growth Why Google just boosted its stake in a bitcoin miner Economic data: Housing starts (July); Building permits (July) Earnings: Home Depot (HD), XPeng (XPEV), Medtronic (MDT), Amer Sports (AS), Toll Brothers (TOL), La-Z-Boy (LZB) Here are some of the biggest stories you may have missed overnight and early this morning: Signs of a healthier path to new records emerge for stocks Nvidia is working on an H20-beating AI chip for China Trump tariffs get S&P seal of approval Why stocks are looking ripe for a regime shift Intel gets a $2 billion lifeline from SoftBank Trump pushes Putin-Zelensky meeting after talks with both Home Depot to report earnings as Wall Street eyes US sales growth Why Google just boosted its stake in a bitcoin miner Intel gets one new now With chatter today that the government is nearing taking a 10% stake in Intel, I guess I shouldn't be shocked the bruised tech giant is hoping to gain some Street cred on its future product roadmap by tapping Softbank and Masa for cash. Embattled Intel CEO Lip Bu Tan also gains a Trump friend in Masa. Softbank will invest $2 billion in Intel at $23 a share. 'Semiconductors are the foundation of every industry. For more than 50 years, Intel has been a trusted leader in innovation. This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role," Softbank chair and CEO Masayoshi Son said in a statement. Added Intel CEO Lip Bu Tan, "We are very pleased to deepen our relationship with SoftBank, a company that's at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing U.S. technology and manufacturing leadership. Masa and I have worked closely together for decades, and I appreciate the confidence he has placed in Intel with this investment.' It's still something to see this unfolding at Intel, which has billions in cash and is in no means in a financial death spiral. Given Masa's close ties to the Trump administration, I suspect the government stake announcement could next. None of this is a good signal on Intel's turnaround, bottom line. A Trump administration spokesperson didn't return my request for comment. With chatter today that the government is nearing taking a 10% stake in Intel, I guess I shouldn't be shocked the bruised tech giant is hoping to gain some Street cred on its future product roadmap by tapping Softbank and Masa for cash. Embattled Intel CEO Lip Bu Tan also gains a Trump friend in Masa. Softbank will invest $2 billion in Intel at $23 a share. 'Semiconductors are the foundation of every industry. For more than 50 years, Intel has been a trusted leader in innovation. This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role," Softbank chair and CEO Masayoshi Son said in a statement. Added Intel CEO Lip Bu Tan, "We are very pleased to deepen our relationship with SoftBank, a company that's at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing U.S. technology and manufacturing leadership. Masa and I have worked closely together for decades, and I appreciate the confidence he has placed in Intel with this investment.' It's still something to see this unfolding at Intel, which has billions in cash and is in no means in a financial death spiral. Given Masa's close ties to the Trump administration, I suspect the government stake announcement could next. None of this is a good signal on Intel's turnaround, bottom line. A Trump administration spokesperson didn't return my request for comment. Sign in to access your portfolio
