US Inflation Cools Mildly To 3.4% In April 2024, First Downward Trend In 4 Months

US inflation cooled off to 0.3% in April 2024, slightly lower from 0.4% on a seasonally adjusted basis, after rising 0.4 percent in March, the U.S. Bureau of Labor Statistics reported on Tuesday. Also, the annual inflation that ended on April 2024, stood at 3.4%, which also eased from 3.5% of previous month. Broadly, the inflation data has come in-line with estimates.

US inflation at 3.5% in March was highest since September 2023.

Inflation has been on the rising spree since the start of 2024 with CPI at 3.5% in March, 3.2% in February, and 3.1% in January 2023. Hence, the latest inflation print is the first downward trend in 2024.

As per the data, the index for shelter rose in April, as did the index for gasoline. Combined, these two indexes contributed over seventy percent of the monthly increase in the index for all items.

The energy index rose 1.1 percent over the month. The food index was unchanged in April. The food at home index declined 0.2 percent, while the food away from home index rose 0.3 percent over the month.

Also, the for all items less food and energy rose 0.3 percent in April, after rising 0.4 percent in each of the 3 preceding months. Indexes which increased in April include shelter, motor vehicle insurance, medical care, apparel, and personal care. The indexes for used cars and trucks, household furnishings and operations, and new vehicles were among those that decreased over the month.

Further, the all items index rose 3.4 percent for the 12 months ending April, a smaller increase than the 3.5-percent increase for the 12 months ending March. The all items less food and energy index rose 3.6 percent over the last 12 months. The energy index increased 2.6 percent for the 12 months ending April. The food index increased 2.2 percent over the last year.

The latest data comes a day after US Federal Reserve's chair Jerome Powell reiterated inflation is falling more slower than expected and that is likely to keep FOMC on hold for an extended period.

Powell at the annual general meeting of the Foreign Bankers' Association in Amsterdam shared that he expected to inflation to come down through the year, however, that has not happened so far. He said, the Fed will need to be patient and let restrictive policy do its work.

However, Powell also does not expect Fed to increase key fund rates going forward.

In the latest policy outcomes, FOMC decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.

Fed seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.

FOMC said, "The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks."