Zürcher Nachrichten - US inflation cooled in April as Trump began tariff rollout

The April data covers the early days of Trump's new levies against most countries -- including steep duties on China -- which spooked financial markets and raised fears of a spike in prices.

The US president has since scaled back some of the duties and paused others, helping to soothe nervous investors, though tariffs remain well above their recent historical average.

The consumer price index (CPI) eased to 2.3 percent in April from a year ago, a tick below the 2.4 percent figure recorded in March, the Labor Department said in a statement.

The April CPI release was the smallest 12-month increase since February 2021, and was slightly lower than the median estimate from surveys of economists conducted by Dow Jones Newswires and The Wall Street Journal.

"No Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, are DOWN!!!" Trump wrote on social media.

He also took aim again at Federal Reserve Chair Jerome Powell over the central bank's recent decision to continue holding interest rates steady.

"What is wrong with Too Late Powell?" Trump said. "Not fair to America, which is ready to blossom? Just let it all happen, it will be a beautiful thing!"

Major Wall Street indices were relatively unchanged following the data release, with the Dow Jones Industrial Average trading lower, and the S&P 500 and Nasdaq Composite indices up at around 2:15 pm in New York (1815 GMT).

- 'Little relief' -

Democratic Senator Elizabeth Warren took a very different view on the data to Trump.

"Consumers and businesses will feel little relief from President Trump folding to Xi Jinping and are bracing for supply chain disruptions and even empty shelves," she said in a statement, referring to the deal struck over the weekend between the United States and China to lower tariffs while continuing negotiations.

Several analysts struck a cautious note about inflation on Tuesday, suggesting that now was not the time for the Fed to cut rates.

"This may be the low point in 2025," Nationwide senior economist Ben Ayers wrote in a note shared with AFP.

"As tariff costs increasingly flow into consumer prices, we expect a jump in the CPI this summer, pushing the annual reading back above three percent," he added.

"Looking ahead, higher tariffs will lead to a renewed inflation impulse," EY chief economist Gregory Daco said in a statement.

But, he added, the recent tariff detente with China means that impulse will be slightly weaker than previously expected.

Prices rose 0.2 percent from a month earlier, with "more than half" of the increase due to a 0.3 percent rise in shelter costs, according to the Labor Department.

Excluding volatile food and energy costs, the inflation rate was 0.2 percent from a month earlier, and 2.8 percent over the past 12 months.

The monthly figure was slightly below expectations, while the annual figure was in line with forecasts.

- 'Too early' to tell -

Despite the good news overall, there were nevertheless some signs of Trump's tariffs in the data.

The index for household furnishings and operations increased 1.0 percent in April after standing still in March, the Labor Department said.

In a recent investor note, economists at Deutsche Bank had flagged that this data point would provide a good indication of how some "import-heavy categories" could be affected by tariffs.

The energy index -- which fell sharply in March -- increased 0.7 percent in April, according to the Labor Department, spurred by a sharp rise in natural gas and electricity prices.

The gasoline index decreased 0.1 percent over the month on a seasonally-adjusted basis, and by 11.8 percent over the past 12 months.

The data will likely be well-received by the Fed, which has indicated it is in no hurry to cut interest rates.

E.Leuenberger--NZN