Annual inflation rate hit 2.3% in April, less than expected and lowest since 2021

April brought a rare bit of calm to the inflation story—just not enough to let the Fed breathe easy.

Consumer prices rose 0.2% month-over-month, coming in softer than expected for the third straight month. Annual inflation dipped to 2.3%, the lowest reading since February 2021, while core inflation (excluding food and energy) held steady at 2.8%. Egg prices dropped 12.7% (yes, you read that right), and even used car prices declined again.

Markets exhaled. Treasury yields slipped, the dollar fell, and S&P futures turned green.

So what’s keeping inflation tame?

Retailers are still sitting on bloated inventories and trying to avoid sticker shock while tariffs flip-flop weekly. New car prices? Flat. Apparel? Down. Even furniture costs didn’t fully reflect higher import duties—yet. Trump’s 90-day tariff truce with China is giving companies time to front-load supplies, but economists warn that price hikes are just being delayed, not dodged.

And with port congestion likely in the coming months as firms race to import goods before tariffs potentially snap back up, we could be in for a second wave of price pressures. Think of this CPI print as the calm before a logistics-fueled inflation storm.

Regulators pause, Trump presses play

The Fed is staying in wait-and-see mode. After holding rates steady last week, policymakers now face the weird combo of softening inflation data and unpredictable trade policy that could light the fuse all over again. The market’s expectation for rate cuts has shifted out to September, down from June just weeks ago.

Meanwhile, Trump’s tariff regime continues to keep businesses—and consumers—guessing. Companies from Nintendo to Procter & Gamble have hinted at eventual price hikes if tariffs stick. And with the White House dialing up executive orders to support U.S. production, the administration is still playing both sides of the inflation coin: regulating and subsidizing supply while fueling cost pressure through trade friction.

Bottom line: April inflation gave everyone a breather—but the road ahead is foggy. With political tariffs driving economic policy, inflation may end up being less about data... and more about diplomacy.

⚡️ Join 200k readers on our daily stock market newsletter: thestockmarket.news