Inflation, which has been in retreat for months, barely budged in April as price increases for housing, gas, and vehicles kept the overall rise in the cost of living too high for comfort.
The Consumer Price Index rose 4.9% over the year ending in April, barely down from a 5% annual increase in March and in line with the median forecast of economists, the Bureau of Labor Statistics said Wednesday.
Price increases for shelter, gas, and used cars and trucks were the biggest contributors to a 0.4% month-over-month increase to the index, outweighing a few bright spots including a 0.2% decline in grocery prices and a 2.6% drop in air fares.
The report underscored just how far inflation still has to go before it’s down to the 2%-a-year level that policymakers at the Federal Reserve are aiming for, even as the central bank has opened the door to pausing its campaign of anti-inflation interest rate hikes.
While inflation has now fallen well below the 40-year peak of 9.1% it reached in June 2022, stubbornly high price increases will likely encourage the Fed to keep rates high for a while, Karyne Charbonneau, an economist at CIBC, said in a commentary.
“Overall price pressures picked up momentum once again,” she wrote. “Today’s data was in line with expectations and does not change our view that the Fed has now paused its interest rate hikes, but the still hot pace in core inflation also reaffirms that rate cuts are not in the cards for this year.”