The U.S. Federal Reserve in May warned that America is facing an increased risk of stagflation. Inflation data for April somewhat assuages that fear.

Inflation slows with headline CPI at +2.3% Y/Y, lowest since Feb 2021. Click for more on the data and what it may mean for the markets.

Broken down by category, some of the sectors most impacted by tariffs saw a price decline from last month, including apparel and used cars and trucks.

U.S. consumer prices rebounded moderately in April as declining food costs partially offset rising rents, leading to the smallest annual increase in four years, but the inflation outlook remains unclear against the backdrop of tariffs.

News that the U.S. and China have drastically reduced reciprocal tariffs for 90 days as they continue trade talks has already put a dent in rate-cut expectations.

President Trump repeated his call for the Federal Reserve to cut interest rates after April's inflation report was cooler than expected.

The US Bureau of Labor Statistics reported a 2.3% increase in the all items Consumer Price Index for the 12 months to the end of last month, down from 2.4% for the 12 months to the end of March. This marked the smallest rise since February 2021 and is well below April 2024’s 3.35%.

Eggs saw their sharpest monthly price drop in 40 years, while wages and personal finance conditions improve in Trump’s economy.