April Shows Subtle Cooling in U.S. Inflation Trends

Inflation continues to impact millions of Americans, though there was some cooling in April. Rising gasoline prices contributed to overall inflation for the month, and housing costs also increased. However, prices for groceries and vehicles slightly declined from March, and the rate of increase in medical care costs also moderated.

"The index for shelter rose in April, as did the index for gasoline. Combined, these two indexes contributed over seventy percent of the monthly increase in the index for all item," the Labor Department’s monthly report said.

In the headline figure for the month, U.S. consumer prices increased by 0.3%, compared to 0.4% in each of the two previous months, according to the Labor Department’s May 15 report on the Consumer Price Index (CPI).

The CPI, a closely watched inflation gauge, measures what American consumers pay for everyday items ranging from clothing to cars. The widely reported consensus for the month had anticipated a 0.4% increase.

Overall, food prices remained unchanged in April, following a 0.1% increase in March. Within the food category, grocery prices declined by 0.2% after two consecutive months of steady readings, while dining-out expenses rose by 0.3% the second month in a row.

Meanwhile, over the past year, food inflation continued at a rate of 2.2% for the third time. During this period, grocery prices rose by 1.1%, while dining-out costs increased by 4.1%. These figures contrast with their previous rates of increase, which were 1.2% for groceries and 4.2% for dining out.

In other sectors, there was a 2.8% increase in pump prices in April, contrasting with the 1.7% increase of the previous month. Comparing year-on-year, gas prices saw a 1.2% climb, against the previous rise of 1.3%.

The broader energy index, which includes items like gasoline, electricity, and fuel oil, rose by 1.1% for the second consecutive month. Energy prices year-over-year increased by 2.6%, which compares to the previously recorded increase of 2.1%.

Excluding volatile food and energy components, the rate of core consumer prices increased by 0.3% in April, which was mostly in line with expectations and followed three consecutive 0.4% monthly gains.

Shelter or housing prices increased by 0.4% for the third month, marking their 48th consecutive monthly rise, with a year-over-year increase of 5.5%. Recent 12-month comparisons show gains of 5.7% in both April and February, 6% in January, 6.2% in December, 6.5% in November, 6.7% in October, 7.2% in September, 7.3% in August, 7.7% in July, 7.8% in June, 8% in May, 8.1% in April, and 8.2% in March, the latter being their most significant annual increase since June 1982.

Components of shelter include prices of items like rent for apartments, rental equivalence, lodging away from home such as hotels and motels, and housing at schools. This index accounts for about one-third of the entire CPI.

In other closely watched pricing areas:

• Clothing prices jumped 1.2% for the month after rising by 0.7% previously. They advanced 1.3% from a year ago.
• New vehicle prices declined by 0.4% in April after falling by 0.2%. They also showed a year-over-year decline of 0.4%.
• Prices for used cars and trucks fell by 1.4% during the month, following a 1.1% decrease previously. Compared to prices from a year ago, they have dropped by 6.9%.
• When compared to the previous year, airline fares fell by 5.8%. As for the month, they fell by 0.8% following a 0.4% decline.

In terms of the headline annual rate and in line with expectations, inflation rose by 3.4% for the 12 months ending April, down from the 3.5% inflation rate reported for the annual period ending in March.

"This is the first print in a month that wasn’t hotter than expected, so there’s a relief rally," CNBC quoted Dan North, senior economist at Allianz Trade North America. "The excitement is a little overdone. This is not Caitlin Clark. She’s exciting, this is not exciting."

For a broader perspective and a look further back, the inflation rate peaked at 9.1% during the 12-month period ending in June 2022. This was the fastest rate of inflation since November 1981. Additionally, until March 2023, inflation rates had remained at or above 6% for 17 consecutive months.

Meanwhile, as expected, core inflation increased 3.6% in the year through April, compared to 3.8% previously. This core, "all items less food and energy" index is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) to guide the central bank in setting its key interest rate.

As recently as September 2022, the annual core inflation rate at 6.6% was the highest since August 1982. Many economists consider the core reading as a better predictor for future inflation.

The following table of key inflation figures is for the last seven months through April, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi) on May 15, 2024. To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

October 2023 to April 2024 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)

The BLS releases inflation data around the middle of the month, covering consumer prices surveyed up to the previous month. The Consumer Price Index (CPI) for May and the latest annual period will be made public on June 12, 2024.

The CPI data is also used to calculate inflation rates and power this site’s U.S. Inflation Calculator, which displays the cumulative inflation and the change in the buying power of the U.S. dollar over time.