US inflation increased less than anticipated in April, but economists forecast a stronger impact from tariffs in the upcoming months

The US consumer price index rose by 0.2% month-over-month in April, following a 0.1% decline in March (the first negative figure in five years), falling short of the expected 0.3% increase.

Year-over-year inflation rose by 2.3% in April, down slightly from 2.4% in March and below the 2.4% consensus forecast.

Core inflation, which excludes the volatile food and energy sectors, increased by 0.2% in April, following a 0.1% rise in March. The annual core CPI remained steady at 2.8%, in line with expectations.

The moderate increase in consumer prices in April is somewhat reassuring, but economists remain cautious, anticipating inflation will rise in the coming months due to the higher costs of imported goods resulting from tariffs.

Economists expect a stronger impact from tariffs in May’s inflation report, though the outlook has improved following the recent US-China trade agreement, in which both sides reduced initial high import taxes for the next 90 days, signaling a significant step in de-escalating the trade conflict between the world’s two largest economies.

While economists foresee further inflationary increases, they no longer expect as sharp a rise as initially predicted. The 90-day ceasefire offers US policymakers time to reassess the situation. However, the Federal Reserve is expected to keep its monetary policy steady during this period, after maintaining the benchmark overnight interest rate at 4.25%-4.50% in last week’s policy meeting.