United States: Inflation rises in April from the prior month
Latest reading: Consumer prices rose 3.8% in annual terms in April, following a 3.3% increase in the previous month. April’s reading was the strongest since May 2023, above market expectations and well above the Fed’s 2.0% target.
Relative to the previous month’s data, there were higher price pressures for housing (+3.3% on a year-on-year basis vs +3.0% in March), transportation (+6.9% vs +5.0% in March), food (+3.2% vs +2.7% in March) and energy (+17.5% vs +12.6% in March).
Meanwhile, core consumer prices rose 2.8% in annual terms in April, following a 2.6% rise in the previous month.
Finally, consumer prices increased 0.64% in April in month-on-month terms, following a 0.87% increase in the prior month.
Panelist insight: On the data and monetary policy implications, Desjardins’ Marc-Antoine Dumont said:
“At present, there is little evidence that the surge in energy prices is leading to a pronounced acceleration in core inflation, which excludes food and energy. Against this backdrop, the Fed is expected to maintain its current policy stance. Even if an agreement between Iran and the United States appears increasingly likely, the situation remains unpredictable. Should oil prices remain elevated for an extended period, inflationary pressures could broaden and economic conditions deteriorate. That said, given the recent resilience of the US economy, this scenario remains a risk rather than a baseline assumption.”