Inflation slowed more than expected in April, despite tariff-related price pressures building

By Alicia Wallace, CNN

(CNN) — US inflation slowed to its lowest rate in more than four years, an unexpected and welcome development at a time when President Donald Trump’s dramatically escalated tariffs are expected to cause prices to rise.

Consumer prices rose 0.2% last month, bringing the annual inflation rate to 2.3%, an unexpectedly cooler reading than the 2.4% increase seen in March, according to the latest Consumer Price Index data released Tuesday by the Bureau of Labor Statistics.

It’s the lowest annual rate since February 2021.

However, what’s been a yearslong unwinding of post-pandemic inflation isn’t expected to last.

“The larger tariff-related price adjustments are likely to come over the next few months,” Alexandra Wilson-Elizondo, co-head and co-chief investment officer of multi-asset solutions at Goldman Sachs Asset Management, wrote Tuesday. “Consequently, we still anticipate (the Federal Reserve) remaining on the sidelines in the near term and for markets to be trading with negotiation and reconciliation headlines.”

Consumers got some relief at the grocery store, where prices fell 0.4% from March, and that brought down overall food prices by 0.1%.

Egg prices sank 12.7% for the month, reflecting declines seen on the wholesale side as the industry starts to recover from a deadly bout of avian flu. The average price of a dozen Grade A eggs fell from $6.23 to $5.12, BLS data shows.

Annually, egg prices are up 49.3%.

Economists had expected inflation not to slow on an annual basis last month: Gas prices dropped off less last month than they did earlier this year, and higher costs associated with President Donald Trump hiking of import taxes on US trading partners was expected to start filtering through to the store shelves.

However, prices didn’t rise as much as economists thought they would.

Economists expected that the CPI would rise 0.3% from March and hold steady at 2.4% for the 12 months ended in April, according to FactSet.

Food and energy (which rose 0.7% from March) are two of the areas where consumers most frequently encounter inflation; however, they’re also the most volatile and affected by temporary events such as weather, war, disease, supply chain snarls, and demand swings.

The Core CPI gauge, which strips out food and energy, rose 0.2% from March, remaining at an annual rate of 2.8%, according to Tuesday’s report.

This story is developing and will be updated.

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