HomeInflationUS Inflation Rate Below 5% for First Time in Two Years

US Inflation Rate Below 5% for First Time in Two Years

April saw an increase in inflation from March, but the annual rate continued to slow for the tenth consecutive time, reaching a two-year low, according to a report from the U.S. government released on Wednesday, May 10.

Underlying or core inflation remained persistently high, due in large part to rising housing costs. Prices for items such as electricity, new vehicles, clothing, and healthcare continued to be elevated when compared to the previous year.

In the headline monthly figure, U.S. consumer prices rose 0.4% in April, following a 0.1% increase in March, the Labor Department said in its monthly report on the Consumer Price Index (CPI). The CPI is a closely watched inflation gauge that measures what Americans consumers pay for everyday items, ranging from eggs to electricity.

In April, overall food prices remained unchanged for the second consecutive month. Within the food category, grocery prices decreased by 0.2%, following a 0.3% decline in March that was their first monthly decrease since September 2020. In contrast, the cost of eating out continued to increase, albeit at a slower pace, rising by 0.4% compared to the previous month’s 0.6%.

However, despite this trend, food inflation over the past year remained high at 7.7%, down slightly from 8.5%. During the same period, grocery prices increased by 7.1%, while the cost of food consumed outside of the home increased by 8.6%, compared to their respective previous rates of 8.4% and 8.8%

In other news, prices at the pump increased by 3% in April, following a 4.6% drop in March. On a year-on-year basis, gas prices declined by 12.2%, compared to a 17.4% decrease in the previous year. To provide some perspective, the highest level of gasoline inflation in the past year occurred in the 12 months ending in June, when it reached 59.9%, the highest level since March 1980.

The broader index for energy, which includes items like gasoline, electricity, and fuel oil, climbed by 0.6% for the month of April, after falling by 3.5% in March. Energy prices year-over-year decreased 5.1%, down from a decline of 6.4% in the previous year.

Excluding the more volatile food and energy components, the rate of core consumer prices rose by 0.4% in April for a second straight month.

Shelter or housing prices rose by 0.4% in April, down from 0.6% in the prior month, but still showed a significant year-over-year increase of 8.1%. They advanced 8.2%, previously, marking their largest 12-month jump since June 1982.

"The index for shelter was the largest contributor to the monthly all items increase, followed by increases in the index for used cars and trucks and the index for gasoline," the Labor Department’s monthly report said.

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 categories:

  • Clothing prices rose 0.3% for a second month. They increased 3.6% from a year ago.
  • Breaking a streak of 23 straight advances, new vehicle prices decreased 0.2%. Nevertheless, they still climbed by 5.4% year-over-year.
  • Prices for used cars and trucks rose by 4.4% in April, marking their first monthly increase in ten months. However, compared to prices from a year ago, they have fallen by 6.6%. This is in stark contrast to February of last year when they had a soaring year-on-year pace of 41.2%.
  • Compared to a year earlier, airline fares decreased 0.9% after having soared by 17.7% previously. In April, they increased 2.6% following a rise of 4% in March.

In terms of the headline annual figure, inflation increased by 4.9% from a year earlier, which is down from the 5% rate reported previously. This represents the smallest inflation rate and the first time it has fallen below 5% since April 2021. For some perspective, the highest inflation rate in the past year occurred in the 12-month period ending in July, which was at 9.1% — the fastest rate of inflation since November 1981. Additionally, until March of this year, inflation rates had been at or above 6% for seventeen consecutive months.

Meanwhile, core inflation increased by 5.5% over the past year, down from 5.6% previously. The 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, the 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.

"Today’s reports suggests that the Fed’s campaign to quell inflation is working, albeit more slowly than they would like," CNBC quoted Quincy Krosby, chief global strategist at LPL Financial.

While the report contains some positive signs for a continued slowdown in price gains, "it does suggest a risk that rates will need to remain high for a little longer than we have assumed," WSJ quoted Andrew Hunter, an economist at Capital Economics.

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 10, 2023. 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 2022 to April 2023 Consumer Prices – Gains & Losses in Percent
(Seasonally Adjusted from Prior Month and Unadjusted 12-Month)

  Oct 2022 Nov 2022 Dec 2022 Jan 2023 Feb 2023 Mar 2023 Apr 2023 12 Month
All items 0.5 0.2 0.1 0.5 0.4 0.1 0.4 4.9
  Food 0.7 0.6 0.4 0.5 0.4 0.0 0.0 7.7
    Food at home 0.5 0.6 0.5 0.4 0.3 -0.3 -0.2 7.1
    Food away from home 0.9 0.5 0.4 0.6 0.6 0.6 0.4 8.6
  Energy 1.7 -1.4 -3.1 2 -0.6 -3.5 0.6 -5.1
    Energy commodities 3.7 -2.1 -7.2 1.9 0.5 -4.6 2.7 -12.6
      Gasoline (all types) 3.4 -2.3 -7 2.4 1 -4.6 3 -12.2
      Fuel oil 19.8 1.7 -16.6 -1.2 -7.9 -4 -4.5 -20.2
    Energy services -0.7 -0.6 1.9 2.1 -1.7 -2.3 -1.7 5.9
      Electricity 0.5 0.5 1.3 0.5 0.5 -0.7 -0.7 8.4
      Utility (piped) gas service -3.7 -3.4 3.5 6.7 -8 -7.1 -4.9 -2.1
  All items less food, energy 0.3 0.3 0.4 0.4 0.5 0.4 0.4 5.5
    Commodities less food, energy -0.1 -0.2 -0.1 0.1 0.0 0.2 0.6 2
      New vehicles 0.6 0.5 0.6 0.2 0.2 0.4 -0.2 5.4
      Used cars and trucks -1.7 -2 -2 -1.9 -2.8 -0.9 4.4 -6.6
      Apparel -0.2 0.1 0.2 0.8 0.8 0.3 0.3 3.6
      Medical care 0.0 0.2 0.1 1.1 0.1 0.6 0.5 4
    Services less energy 0.5 0.5 0.6 0.5 0.6 0.4 0.4 6.8
      Shelter 0.7 0.6 0.8 0.7 0.8 0.6 0.4 8.1
      Transportation 0.6 0.3 0.6 0.9 1.1 1.4 -0.2 11
      Medical care -0.4 -0.5 0.3 -0.7 -0.7 -0.5 -0.1 0.4


The BLS releases inflation data around the middle of the month for 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 13, 2023.

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


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