CPI Report Live Updates: Inflation Dips to 4.9%

Sustainability Awakening

The US Labor Department’s consumer price index shows that inflation slowed for the tenth straight month in April.

Consumer prices increased by 4.9% YoY, down from 5% in March.

Grocery prices dropped, but used car prices surged. An underlying inflation measure, which captures longer-lasting trends, remained elevated.

While the data offered some signs that inflation is continuing to cool, the core consumer price index for April showed prices rising 0.3% MoM and 5.4% YoY.

The nation’s road back to normal inflation levels will be bumpy, but the Federal Reserve has signaled that it may pause further rate hikes as it waits to see if its string of rate increases do their part to tame inflation.

The core consumer price index measures inflation without including the costs of energy and food, which are typically the most volatile components of the broader consumer price index.

The Federal Reserve’s target is an inflation rate of 2%, which it says "is most consistent with the Federal Reserve’s mandate for maximum employment and price stability."

Stock indices turned mixed in early Wednesday trading after the inflation report showed inflation rose less than expected in April.

The Dow Jones Industrial Average eased less than 1%; The S&P 500 rose 0.25% and Nasdaq futures climbed 0.76%.

Prices for 10-year Treasuries also climbed, sending yields lower, after the report said inflation at the consumer level was 4.9% last month, down from 5% in March and the lowest level in two years.

While the data offered some signs that inflation is continuing to cool, fears of stagflation were percolating on Wall Street ahead of today’s inflation report.

Stagflation happens when economic growth is sluggish while inflation is high.

The scenario has loomed large in investors' minds as last year’s inflation surge forced the Fed to launch an aggressive campaign to hike interest rates that many expected to cause a recession.

Some also believe the recent collapse of a handful of regional banks could hurt lending and slow growth, forcing the Fed to cut rates before inflation is tamed.

For American shoppers and drivers, Wednesday’s inflation report was mixed. Gasoline prices jumped 3% just in April.

By contrast, grocery prices dropped for a second straight month. Used car prices surged 4.4% after nine months of declines.

Although inflation has edged down just gradually, the Federal Reserve last week signaled it now will likely pause its aggressive campaign that has hiked a key interest rate by 5 points over the past 14 months.

The Personal Consumption Expenditure price index, the Federal Reserve’s preferred measure of inflation, comes out next week.

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