Inflation Eases In April As Trump's Tariffs Don't Push Prices Higher

Consumer prices in the U.S. eased faster than expected in April, with fresh tariffs introduced by President Donald Trump appearing not to have a swift and tangible impact on the cost of living.

The Consumer Price Index (CPI) was 2.3% higher compared to a year ago, the Bureau of Labor Statistics said Tuesday, missing economists' expectations of 2.4% and the previous reading.

The monthly gain was 0.2%, rebounding from a prior decline of 0.1%, yet falling short of a 0.3% forecasted.

The core CPI, which strips out volatile food and energy categories, rose to 2.8% on an annual basis, unchanged from both the previous and expected 2.8%. Month over month, it increased 0.2%, inching higher from the 0.1% uptick in March but below expectations of 0.3%

Shelter costs rose 0.3% in April, contributing to over half of the total monthly increase in the overall consumer price index.

Airline fares, used vehicles, communication services and apparel were among the key categories that saw price declines in April.

<figure class="wp-block-table is-style-stripes">

Metric	April 2025	March 2025	Forecast
Headline CPI (YoY)	2.3%	2.4%	2.4%
Headline CPI (MoM)	0.2%	-0.1%	0.3%
Core CPI (YoY)	2.8%	2.8%	2.8%
Core CPI (MoM)	0.2%	0.1%	0.3%

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What Does This Mean For The Fed?

Before the release, interest rate futures reflected slim odds of policy easing. CME FedWatch data showed just an 8% chance of a rate cut in June, and 36% in July.

Markets priced in only 60 basis points?0.6 percentage points?of total cuts by the end of 2025, well below earlier expectations for more aggressive easing.

Yet the modest progress is unlikely to sway the Federal Reserve toward near-term rate cuts, as markets remain cautious amid persistent inflation risks.

Inflation remains above the central bank's 2% target, and with shelter and services inflation proving sticky, policymakers may choose to keep borrowing costs elevated through the second half of the year.

Market Reactions: Dollar And Yields Ease Slightly

The U.S. Dollar Index (DXY) ? as tracked by the Invesco DB USD Index Bullish Fund ETF slightly eased 0.1%, down following Monday's sharp 1.3% rally. The 2-year Treasury yield edged down to 3.98%.

U.S. stock futures, which had rallied on Monday after news of a U.S.-China tariff truce, were mixed in premarket trading as traders recalibrated inflation and interest rate expectations.

Futures on the S&P 500 index were up 0.2%, while contracts on the Dow Jones Industrial Average fell 0.4%.

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Image created using artificial intelligence via Midjourney.