U.S. Consumer Price Index (April 2025)

Inflation turns higher in April, as shelter costs remain a key driver of price growth  

• The Consumer Price Index (CPI) rose 0.2% in April, after falling 0.1% month-on-month (m/m) in March. On a twelve-month basis, CPI was up 2.3% (from 2.4% in March). 
  
  • The energy index rose 0.7% m/m, as a jump in electricity and natural gas costs more than offset the pullback in gas prices. Meanwhile, grocery store prices declined 0.4% m/m, with the year-ago measure slowing to 2.0%.
• Excluding food and energy, core inflation rose 0.2% m/m, following a cooler than expected 0.06% m/m gain in March. The twelve-month change held at 2.8% for the second consecutive month. 
• Services prices (+0.3% m/m) rebounded in April, after having recorded its softest monthly gain since August 2021 the month prior. 
  
  • Primary shelter costs (+0.4% m/m) remained a key driver of price pressures, though non-housing services (April: +0.1% m/m vs. March: -0.2% m/m) also firmed. This was largely due to a rebound in vehicle insurance premiums (April: +0.7% m/m vs. March: -0.8% m/m) and further gains in medical care services (+0.5% m/m). 
  • Meanwhile, most discretionary service spending categories including recreational (-0.3% m/m), airfares (-2.8% m/m) and other personal services (-0.4% m/m) recorded price declines last month. 
• Core goods inflation rose 0.1% m/m, following a modest pullback the month prior. Small gains were seen in household furnishings, medical care products, recreational and other goods. 

Key Implications

• Price pressures heated up a touch in April, but that was after a very subdued reading the month prior. Most of the uptick was driven by firmer services prices, with higher shelter costs accounting for the nearly two-thirds of the gain in core inflation. And while goods prices also turned higher last month, there was little evidence to suggest that the uptick was driven by President Trump's sweeping tariffs announced at the beginning of April. Efforts by companies to stockpile inventories and a willingness to absorb some of the tariff costs suggests a more incremental strengthening in goods prices is likely to occur over the coming months.
• The U.S. and China moved to deescalate trade tensions over the weekend, with both country's agreeing to a 90-day pause on most of the tariffs imposed in April. Unequivocally, this is a step in the right direction. While it will not undo the near-term inflation impacts already in the pipeline, the administration's move to deescalate, and perceived willingness to quickly negotiate new trade deals, should help to limit the economic damage. 

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