Inflation Research Brief

Key CPI measures resume descent. Annual growth in the headline and core consumer price indices — the latter of which omits food and energy — lowered to 3.4 and 3.6 percent in April, respectively. While bumpy inflation over the last few months curbed Wall Street  expectations for near-term overnight lending rate cuts by the Federal Reserve, April’s cooler readings suggest the Fed is still making meaningful progress in bringing pricing pressures down. Further stripping out housing expenses from core CPI, inflation was only 2.1 percent over the year ended in April. Easing in May’s core PCE measure, a separate inflation metric that is closely watched by the Fed and will be released on the 31, as well as continued disinflation across key CPI readings over the coming months, should help facilitate the conditions needed for at least one rate cut in the remainder of 2024.