Energy Prices Rebound After March Decline
Energy prices posted a 0.7% increase in April after falling 2.4% the prior month. This was driven by higher costs for natural gas (+3.7%) and electricity (+0.8%), which offset a 0.1% drop in gasoline on a seasonally adjusted basis. Despite the rebound, energy remains 3.7% lower over the year, with gasoline down nearly 12%.
Core Inflation Holds Steady Below Forecast
Excluding food and energy, core CPI increased 0.2% for the month, below the forecasted 0.3%. Year-over-year, core inflation remained steady at 2.8%, meeting expectations. Key contributors included medical care (+0.5%), motor vehicle insurance (+0.6%), and household furnishings (+1.0%). Airline fares continued to fall sharply, down another 2.8%, following March’s 5.3% decline.
Food Prices Flat as Grocery Costs Fall
Food prices edged down 0.1% in April, with food at home declining 0.4%, marking the steepest drop since 2020. Egg prices tumbled 12.7%, dragging the meats, poultry, fish, and eggs index down 1.6%. Conversely, food away from home rose 0.4%, led by a 0.6% increase in full-service meals. Year-over-year, food prices are up 2.8%.
Market Forecast: Cautious Bullishness with Tariff Risk Ahead
April’s inflation data points to a cautiously bullish outlook for traders, with price growth appearing contained and slightly below forecasts. While core services remain firm, the broader picture supports expectations for policy stability. However, the inflation impact of Trump’s tariffs remains an open risk heading into summer, especially if trade tensions escalate. Traders should monitor negotiations closely for signals on consumer cost pressures.
