Investing.com – U.S. inflation slowed marginally in April, while the gauge of core prices closely watched by the Federal Reserve decelerated slightly but remained stubbornly elevated.
According to data from the Bureau of Labor Statistics (BLS) on Wednesday, the U.S. consumer price index in April rose 3.4% on an annualized basis, in line with expectations, a small slowdown from the 3.5% growth seen the previous month.
On a monthly basis, the index rose 0.3%, a small slowing from the expected 0.4% growth, which had also been seen in March.
Rises in the prices of shelter and gasoline were the main factors behind the increase, according to the BLS, as combined these two indexes contributed over seventy percent of the monthly increase in the index for all items.
Meanwhile, the core reading, which strips out volatile items like food and energy, rose 3.6% year-on-year, a smaller rise than the 3.8% growth seen in March. On a month-on-month basis, the core figure increased by 0.3%, below the 0.4% growth seen in March.
The main indices behind the rise in the core figure were to do with shelter, motor vehicle insurance, medical care, apparel, and personal care, BLS added.
The numbers were still above the Fed’s desired rate of around 2% to achieve stable and sustainable growth, with inflation so far proving difficult to tame.
“Inflation in Q1 was notable for the lack of further progress,” Federal Reserve Chair Jerome Powell said, in a speech on Tuesday.
“Confidence in inflation moving back down is lower than it was. My confidence on that is not as high as it was before.”
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U.S. producer prices increased more than expected in April, data showed on Tuesday, indicating that inflation remained stubbornly high early in the second quarter.
Investors have had to dial back their expectations of U.S. rate cuts this year, and are now pricing in less than 50 basis points of easing before the end of December, compared with 150 bps of easing anticipated at the start of 2024.
U.S. stock futures rose following the inflation data, with the blue-chip Dow Jones Futures contract gaining 180 points, or 0.5%, the broad-based S&P 500 adding 28 points or 0.5%, and the tech-heavy NASDAQ Composite increasing by 88 points or 0.5%, by 08:50 ET (12:50 GMT).
