US inflation slowed unexpectedly in April on a yearly basis in the first full report since President Trump’s sweeping tariffs took effect.
The Consumer Price Index rose 2.3% in April from a year earlier, below March’s 2.4% annual increase, the Bureau of Labor Statistics said Tuesday.
On a month-to-month basis, however, prices rose 0.2% in April, ticking up from the 0.1% decline seen in March, according to the data.
On a core basis, excluding volatile food and energy prices, the CPI rose 2.8% from the year before and 0.2% from March.
“We expect the first signs of tariff related inflation to show up in the April CPI released on Tuesday,” UBS chief economist Jonathan Pingle wrote in a note on Monday.
While year-over-year inflation slowed, the rise in monthly inflation is the first possible sign of a hit from Trump’s trade war, which the Fed last week warned could reheat price increases and hammer employment, warning of an increased risk of stagflation.
However, Tuesday’s data is largely backward-looking, since the US and China announced on Monday a deal to temporarily slash tariff rates, quickly easing tensions between the world’s largest economies.
The agreement lowers US tariffs on Chinese goods to 30% from 145% and Chinese taxes on US imports to 10% from 125% for 90 days while the two nations continue negotiations.
