U.S. Consumer Price Index (April 2026)

Inflation rises to three-year high of 3.8% in April

• The Consumer Price Index (CPI) rose by 0.6% month-on-month (m/m) in April, meeting the Bloomberg consensus forecast. On a twelve-month basis, CPI jumped 3.8% – the fastest rate of growth in three-years.
  • Another surge in energy costs accounted for roughly half the monthly gain in headline, led by a 5.6% m/m gain in prices at the pump. Food prices (+0.5% m/m) also heated up last month, led by a sharp acceleration in grocery costs (+0.7% m/m). 
• Excluding food and energy, core inflation rose 0.4% m/m, a tick stronger than consensus and roughly double the rate of increase from the month prior. On a twelve-month basis, core prices were up 2.8% (from 2.6% in March). 
• Services inflation jumped 0.5% m/m, following a softer 0.2% m/m gain in March. Primary shelter costs were the main driver, rising 0.5% m/m – much stronger than the 0.2% m/m averaged over the prior three months. 
  • Non-housing services also firmed thanks to another uptick in airfares and personal care services. 
• Core goods prices were flat, as price gains in apparel and education & communication goods were offset by a pullback in household furnishings and medical goods.

Key Implications

• Inflationary pressures heated up in April, as elevated crude oil prices continued to push gas prices higher and lead to some spillover price effects across other categories like food and airfares. That said, some of the uptick in core inflation looks overdone. Primary shelter contributed 0.2 percentage points to April's increase – double its normal monthly contribution – which looks to be related to an unwinding of a government-shutdown survey quirk that occurred in the CPI data late last year. This effect should fall out next month, allowing the shelter component to resume its downward trend. 
• This morning's numbers reinforce why the Fed needs to remain patient. Even assuming a "more normal" reading on shelter prices last month, core inflation would've still firmed relative to March. With secondary price effects from higher energy prices likely to intensify in the months ahead, we're likely to see core measures of inflation drift a bit higher and hover around 3% through year-end. Treasury yields across the curve were little changed post-release, with Fed futures now shifting back to pricing in a 60% probability of a rate hike by March 2027. 

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