Consumer Inflation In US Eases In April As Food Prices Fall

The easing of inflationary pressure occurred ahead of any major impact from President Trump’s sweeping tariffs, which economists believe could start influencing prices more noticeably by mid-year.

A closer look at the CPI data shows that falling food prices played a significant role in keeping inflation in check.

Source : ABPLIVE AI

US consumer inflation showed signs of softening in April, as a decline in food costs helped blunt the impact of rising housing expenses. According to data released by the Labour Department on Tuesday, the Consumer Price Index (CPI) edged up 0.2 per cent last month, rebounding slightly from March's 0.1 per cent decline—the first monthly drop since May 2020. The annual CPI increase slowed to 2.3 per cent, marking the lowest rate since February 2021.

The easing of inflationary pressure occurred ahead of any significant impact from President Donald Trump’s sweeping tariffs, which economists believe could start influencing prices more noticeably by mid-year. “Improvements in global trade will provide some clarity on the future path of inflation,” said Jeffrey Roach, chief economist at LPL Financial. “However, the uncertainty about what might happen after these temporary trade deals makes things difficult for the Fed since stagflation remains a risk. If the fog does not clear, the Fed might not be able to adjust policy in June.”

April’s inflation figures also came just days after the US and China agreed to a 90-day truce in their ongoing trade dispute. Although the truce reduces tariffs temporarily, a general 10 per cent import duty and several sector-specific tariffs remain in effect.

Food Prices Drop, While Shelter Costs Drive Core Inflation

A closer look at the CPI data shows that falling food prices played a significant role in keeping inflation in check. Overall food costs dropped by 0.1 per cent, following a 0.4 per cent gain in March. Notably, grocery store prices fell by 0.4 per cent, the steepest decline since September 2020, driven by a sharp 12.7 per cent drop in egg prices—the largest since 1984. Despite the monthly drop, egg prices were still up 49.3 per cent from a year earlier, making them a persistent pressure point for household budgets.

Meanwhile, costs for fruits, vegetables, cereals, and bakery products also saw declines. However, prices for nonalcoholic beverages ticked up by 0.7 per cent. On the energy front, gasoline prices dipped slightly by 0.1 per cent, but households faced higher bills for natural gas and electricity.

Tariff Impact Still to Come, Fed Policy Outlook Remains Uncertain

Despite aggressive trade measures, including a 25 per cent levy on imported light trucks and a doubling of fentanyl-related duties to 20 per cent, the inflation data showed little evidence that tariffs have yet pushed consumer prices higher. Many companies stocked up on inventory before the tariffs took effect, potentially muting short-term price increases.

“With the economy having inventory of about 3.7 months of sales on hand, we expect the impact of tariffs on prices to begin to materialise by the middle of the year,” noted Conrad DeQuadros, senior economic advisor at Brean Capital.

While a temporary agreement with China reduced tariffs on US imports to 10 per cent from 125 per cent and cut US duties to 30 per cent for the next 90 days, underlying concerns remain. The Budget Lab at Yale estimated that the existing tariffs would still raise consumer prices by 1.7 per cent in the near term, translating to a $2,800 loss in household purchasing power without any central bank intervention.

“Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all US trading partners are much higher than they were at the beginning of 2025,” said Gus Faucher, chief economist at PNC Financial. “Those higher tariffs will work their way into consumer goods prices over the next few months, pushing inflation back up.”