US CPI April: Consumer prices rise less than expected, core inflation slows (copyright link)

US consumer prices rise less than expected; core CPI slows

Washington DC | US consumer prices increased less than expected in April, giving financial markets confidence that a September interest rate cut is likely and some cautious relief for President Joe Biden in an election year dominated by the cost of living.

The consumer price index rose 0.3 per cent last month after advancing 0.4 per cent in March and February, leaving the annual rate at 3.4 per cent.

Core CPI, which excludes food and energy, rose 0.3 per cent, matching the consensus forecast but leaving the annual rate slightly down at 3.6 per cent, from 3.8 per cent - the slowest since April 2021.

“Fighting inflation and lowering costs is my top economic priority,” Mr Biden said on Wednesday (Thursday AEST). “I know many families are struggling, and that even though we’ve made progress we have a lot more to do,” he said.

Financial markets also priced in a 52 per cent chance of a 0.25 percentage point rate cut in September, while some have even suggested that a July rate cut might now be on the cards. The US two-year bond rate fell as much as 7 basis points to 4.71 per cent following the release before rising to 4.5 per cent.

Fed Chair Jerome Powell said on Tuesday before the data release that he expected inflation to move back down on a monthly basis “to levels that were more like the lower readings that we were having last year.”